“The Fed is still the investor’s friend”

US stocks rose on Wednesday, the S&P 500 adding 0.5 percent after falling 1.1 percent over the previous two days.

The STOXX Europe 600 Index fell less than 0.1 percent.

US stocks rose despite publication of the minutes of the Federal Reserve's June monetary policy meeting showing that some Fed officials were concerned that investors may be growing too complacent about the economic outlook. From Bloomberg:

“Signs of increased risk-taking were viewed by some participants as an indication that market participants were not factoring in sufficient uncertainty about the path of the economy and monetary policy,” the minutes showed.

However, perhaps investors have reason to be complacent, at least with regards to monetary policy.

Officials agreed they must monitor markets for signs of froth and said that if necessary, supervisory measures should be used to “address excessive risk-taking and associated financial imbalances”...

“The Fed is still the investor’s friend, not something to be feared,” said Brian Jacobsen, who helps oversee $231 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin. “Where there are bubbles, the Fed will use its role as a regulator and supervisor to address those problems. It will not use monetary policy.”

Earlier on Wednesday, a report from China suggests that there is also little likelihood of monetary tightening by the People's Bank of China in the near future. The National Bureau of Statistics reported that China's inflation rate slowed to 2.3 percent in June from 2.5 percent in May.