US market close: Stocks slide but end mostly higher after Fed minutes

US stocks erased gains to close off session highs on 18 May after the Federal Reserve's April meeting minutes revealed "most" members are ready for a rate hike as early as June. While the Nasdaq and S&P 500 closed higher, the Dow Jones ended slightly lower.

"I think this is a short-term, knee-jerk reaction. When you look at what the Fed is saying, they're saying the economy is in pretty good shape," Brad McMillan, chief investment officer at Commonwealth Financial, told CNBC.

The Dow Jones Industrial Average dropped 3.36 points, or 0.02%, to settle at 17,526.62. Goldman Sachs (up 3.4%) and JPMorgan Chase (up 3.9%) were the biggest contributors to gains for the blue-chip gauge, while Wal-Mart led decliners. According to MarketWatch, the Dow traded within a 218-point range during the session, trading up more than 100 points before the minutes and later dropping by as much following the minutes.

The S&P 500 rose a mere 0.42 points, or 0.02%, to close at 2,047.63. While utilities saw a 1.9% decline and telecommunications dropped 1.5%, financials remained strong and closed up 1.9%. CNBC reported that the SPDR S&P Regional Banking ETF (KRE) closed up 4.24%, while the SPDR S&P Bank ETF (KBE) jumped 4.15%.

"Although the market is going to be upset that the Fed is turning more hawkish, the biggest beneficiary of higher rates will be financials," Karyn Cavanaugh, senior market strategist at Voya Financial explained to MarketWatch. Banking institutions can charge higher interest rates when there's a hike in interest rates.

Meanwhile, the Nasdaq Composite Index jumped 23.39 points, or 0.5%, to settle at 4,739.12.

The Fed minutes noted: "Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee's 2% objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June."

According to CNBC, following the release of the April minutes, Fed funds futures signaled a 27% chance of a June rate hike, versus an earlier 16% in the morning and 4% chance last week. "I think (Fed officials) are progressing to the point where action is not only tolerated by the market but encourage by the market," said Alan Rechtschaffen, financial advisor and senior vice president at UBS Wealth Management Americas.

Treasury yields spiked, with the two-year yield rising over 0.9% and the 10-year yield near 1.85%. The US dollar index continued to rise to levels not seen since late March, with the euro by $1.122 and the yen near 110.2 yen against the greenback.

US crude oil futures dropped $0.12 (£0.08; €0.11) to $48.19 (£33.01; €42.94) a barrel. Meanwhile, gold futures for June delivery also dropped down $2.50 (£1.71; €2.23) settling at $1,274.40 (£872.92; €1,135.58)an ounce.

Overseas, European stocks closed more than 0.5% higher and Asian stocks closed down.