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US markets end higher as Fed hints at gradual rate hikes

The US markets ended higher on Wednesday after the minutes from the Federal Reserve's May 2 meeting confirmed that policy makers support a June rate increase and are maintaining a calm attitude about the inflation outlook. The markets started the session in red terrain and remained under pressure in early deals as geopolitical and trade concerns continued to dent investor sentiment. However, Markets rebounded modestly as Fed minutes appeared to have reassured investors that the central bank will not be too aggressive with raising interest rates. The probability of three more rate hikes by the end of this year instead of two slipped immediately after the minutes. According to CME's FedWatch tool, Fed funds futures market is pricing in less than a 40% chance of a fourth rate hike in 2018. On the economic front, the Commerce Department released a report showing a pullback in new home sales in the month of April. The report said new home sales fell by 1.5 percent to an annual rate of 662,000 in April after jumping by 2 percent to a revised rate of 672,000 in March. The street had expected new home sales to drop to a rate of 679,000 from the 694,000 originally reported for the previous month.

The Dow Jones Industrial Average surged 52.40 points or 0.21 percent to 24886.81, the S&P 500 jumped 8.85 points or 0.32 percent to 2,733.29 and the Nasdaq was up by 47.50 points or 0.64% to 7,425.96.

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