Wall St rises after release of 'dovish' Fed minutes

By Sinead Carew

(Reuters) - U.S. stocks gained ground on Thursday after the Federal Reserve released minutes from its September meeting at which the U.S. central bank decided against raising interest rates for now.

The minutes showed that the Fed thought the economy was close to warranting an interest rate hike in September but decided it was prudent to wait for evidence a global economic slowdown was not knocking America off course.

While the initial reaction was more muted, stocks gained ground as the last hour of trading neared. Some strategists said the minutes showed less inclination for a rate hike from the Fed, which likely reassured equity investors.

“Stocks are reacting positively, and the dollar’s reacting negatively to the slightly more dovish comments about near-term prospects for inflation,” said Patrick Maldari, senior fixed income investment specialist at Aberdeen Asset Management in New York, on the FOMC minutes.

The Sept. 17 decision came during a period of heavy market volatility due to concerns about slowing global economic growth, particularly in China.

At 3:04 p.m., the Dow Jones industrial average (.DJI) rose 124.02 points, or 0.73 percent, to 17,036.31, the S&P 500 (.SPX) gained 15.73 points, or 0.79 percent, to 2,011.56 and the Nasdaq Composite (.IXIC) added 16.12 points, or 0.34 percent, to 4,807.27.

"If there's one thing to gain from these minutes, (it's) further evidence about their focus on deflationary pressures and the concern about hiking into an environment where you are seeing inflation expectations come down," said Lowell Yura, Head Of Multi-Asset Solutions, BMO Global Asset Management in Chicago.

The 10 major S&P sectors were up and energy (.SPNY) lead the way with a 1.6 percent increase as crude oil prices rallied and hit a 5-week high. Even the health index (.SPXHC), the worst performer of the day, turned positive, eking out a 0.25 percent increase.

Data released on Thursday showed U.S. jobless claims fell more than expected last week. That gave a more upbeat view of the health of the labour market than Friday's weak monthly report, which had prompted speculation that the Fed would not raise rates this year.

Investors are bracing for quarterly results that will reveal how U.S. companies are being hit by slowing global growth and a strong dollar.

Profits at S&P 500 companies are now expected to fall 4.5 percent in the third quarter, the biggest decline in six years, according to Thomson Reuters data.

After the close, Alcoa (AA.N) will report results, officially starting the earnings season. The stock was up 1.3 percent.

Advancing issues outnumbered declining ones on the NYSE by 2,326 to 699, for a 3.33-to-1 ratio; on the Nasdaq, 1,751 issues rose and 970 fell, for a 1.81-to-1 ratio favouring advancers.

The S&P 500 posted 14 new 52-week highs and no new lows; the Nasdaq recorded 56 new highs and 31 lows.

(Additional reporting by Sam Forgione and Rodrigo Campos in New Yor, Abhiram Nandakumar and Tanya Agrawal in Bengaluru; Editing by Savio D'Souza; Editing by Nick Zieminski)