On Wednesday, stocks pressed sharply higher, with morning gains getting an additional boost when the Federal Reserve's latest meeting minutes were released during the afternoon. After last month's meeting, investors were afraid that interest rate increases would come quickly and furiously, but the minutes showed every intention of trying to reassure the markets that increases would be measured and deliberate. That sent most major stock market benchmarks up 1% to 2% and buoyed the shares of Facebook (NASDAQ:FB), Yelp (NYSE:YELP), and Caesars Entertainment (NASDAQ:CZR).
Facebook gained 7%, hitting its best level since late January after the social-media stalwart climbed in the general move toward higher-growth stocks. Moreover, Facebook also benefited when COO Sheryl Sandberg said in an interview that she did not plan to go into politics, reassuring investors who consider her partnership with CEO Mark Zuckerberg to be an essential part of Facebook's success strategy. With Facebook also having said that it would make a shift to display larger ads on its desktop version, investors believe that the social-media company is poised to make even more money from its growing membership.
Yelp rose 6% after receiving an upgrade from an analyst firm this morning. With its announcement last night that it's launching Yelp Japan and extending its reach into the lucrative Asian market, Yelp hopes that it will be able to build a worldwide network of reviews and travel information for consumers across the globe. The company has been somewhat slow to target Asia for growth, with only a presence in Singapore before last night's announcement. But with the company having solved the challenge of offering a non-Roman-character language, Yelp might well look to expand more broadly into other regional leaders like China and Korea.
Caesars Entertainment rose more than 9% even after the casino operator got a credit-rating downgrade. With one rating agency noting that Caesars is running through its available cash at an alarming rate, investors are realizing that Caesars will have to come up with a capital restructuring at some point. Apparently, though, the hope among shareholders is that they'll be able to negotiate a favorable deal against bond investors in other stakeholders in Caesars, or else today's surge wouldn't make sense. One other possibility is that bond investors are hedging bearish distressed-debt positions by buying stock, effectively giving themselves a call option on the company's success in case their bearish positions turn out to be wrong.