Stocks rally on Fed minutes

Trader Ryan Falvey, centre, works on the floor of the New York Stock Exchange. File photo / AP

Wall Street gains broadened overnight after minutes from the latest US Federal Reserve meeting showed policy makers' concern sluggish economies overseas and an appreciation of the greenback will weigh on US growth, suggesting the central bank might not raise interest rates as soon as expected.

"A number of participants noted that economic growth over the medium term might be slower than they expected if foreign economic growth came in weaker than anticipated, structural productivity continued to increase only slowly, or the recovery in residential construction continued to lag," according to minutes from the Fed Open Market Committee's meeting on September 16-17.

Policy makers also expressed concern about the impact of an ongoing strengthening of the US currency.

"The persistent shortfall of economic growth and inflation in the euro area could lead to a further appreciation of the dollar and have adverse effects on the US external sector," the minutes showed. "Slower economic growth in China or Japan or unanticipated events in the Middle East or Ukraine might pose a similar risk."

"The appreciation of the dollar might also tend to slow the gradual increase in inflation toward the FOMC's 2 per cent goal."

In late afternoon trading in New York, the Dow Jones Industrial Average rose 0.98 per cent, the Standard & Poor's 500 Index added 0.41 per cent, while the Nasdaq Composite Index climbed 0.40 per cent.

Gains in shares of Merck and those of UnitedHealth, last up 2 per cent and 1.8 per cent respectively, led the Dow higher.

US Treasuries pared losses after the release of the Fed minutes, with the yield on the 10-year note up 1 basis point at 2.35 per cent. The US dollar fell, giving up earlier gains.

"It kind of looks like the Fed will take any excuse not to normalise rates in the near term," Lennon Sweeting, a San Francisco-based dealer at the broker and payment provider USForex, told Bloomberg News.

Shares of Alcoa fell, down 2.2 per cent. The company is scheduled to report its latest quarterly earnings after the market close.

Shares of Sears plunged, last down 11 per cent, after Bloomberg News reported that people with knowledge of the matter said a vendor was halting shipments.

"We continue to meet all of our obligations," Chris Brathwaite, a Sears spokesman, said in an email, Bloomberg reported. "We are continuing to work with our vendors and suppliers and are communicating with them regularly as we move through our transformation. To date, we've had no interruptions in the flow of goods to our company."

In Europe, the Stoxx 600 ended the day with a 0.9 per cent decline from the previous close. The UK's FTSE 100 Index slipped 0.2 per cent, while Germany's DAX dropped 1 per cent, as did France's CAC 40.

Oil continued its slide, pushing Brent crude below US$91 a barrel, its lowest since June 2012.