Stock Market Today: Stocks End Mixed After Fed Minutes

Stocks were choppy Wednesday as investors looked ahead to and then assessed the mid-afternoon release of the minutes from the Federal Reserve's February meeting. While the release of the minutes showed that more rate hikes are certainly coming, they also revealed a difference of opinion among central bankers as to just how high the next one will be. 

The Fed minutes showed most central bankers supported the 25 basis point rate hike made earlier this month. The downshift to a smaller rate increase would better allow the Fed to "assess the economy's progress" and "determine the extent of future policy tightening," the minutes said. However, a few central bankers believed that a larger rate hike "would more quickly bring the target range close to the levels they believed would achieve a sufficiently restrictive stance." 

The minutes also indicated support for another 0.25% rate hike at the Fed's March meeting. But recent economic data, including a blowout jobs report, hotter-than-expected inflation pressures, and solid retail sales, means that a bigger hike of 50 basis points could be on the table. 

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"The futures market still sees a higher probability of 25 basis points for the March 22 Fed meeting, although if more current data releases indicate stickier inflation, that could change to 50 basis points," says Quincy Krosby, chief global strategist for LPL Financial. "The Fed has the luxury of a strong labor market, and overall resilient economic landscape, to keep raising rates until the Federal Open Market Committee (FOMC) feels comfortable that inflationary pressures are closer to its price stability mandate." 

The minutes overall suggested a "wait-and-see approach," Krosby says, but should inflation continue to climb, there could be enough voting members in the data-dependent Fed to "push for a 50 basis point move."

At the close, the Nasdaq Composite was up 0.1% at 11,507, while the S&P 500 was off 0.2% at 3,991, and the Dow Jones Industrial Average was 0.3% lower at 33,045. 

Why investors should buy dividend growth stocks

The market's weakness in recent weeks has likely jarred investors that were enjoying the run up to start the year. However, the pullback has "actually been tame and perfectly expected, given the sudden and significant market rally seen throughout January and in part of February," says David Bahnsen, chief investment officer of wealth management firm The Bahnsen Group. 

And amid hawkish Fed commentary and recession uncertainty, it's likely that volatility remains the order of the day – though this is a good thing for long-term investors, Bahnsen adds. Regardless of where the market goes in the near term, investors should focus on high-quality stocks with strong cash flows and dividends. These can be found in the best dividend growth stocks, Bahnsen says, which "provide an additional level of quality in a time where quality is needed." Of course, the best dividend stocks for payout growth are found among the Dividend Aristocrats, companies in the S&P 500 that have increased their dividends for at least 25 years straight.