Benchmarks closed in the green on Wednesday after the Fed kept key interest rates unchanged. The Bank of Japan’s (BOJ) surprise move to control the yield curve also had a positive impact on both the global and domestic markets. Further, strong decline in crude inventories boosted oil prices, which in turn led gains for energy stocks. All the three key U.S. indexes registered stable gains with the Nasdaq closing at its all-time highest settlement.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) increased 0.9%, or 163.74 points, to close at 18,293.70. The S&P 500 rose 1.1% to close at 2,163.12. The tech-laden Nasdaq Composite Index closed at 5,295.18 gaining 1%. The fear-gauge CBOE Volatility Index (VIX) decreased 17.4% to settle at 13.2. A total of around 7.6 billion shares were traded on Wednesday, higher than the last 20-session average of 6.8 billion. Advancers outpaced declining stocks on the NYSE. For 84% stocks that declined, 13% advanced.
Fed and BOJ in Spotlight
After the end of its two-day policy meeting yesterday, the Fed had decided to keep key interest rates unchanged. The FOMC in its policy statements said that argument for a rate hike “has strengthened,” but the central bank waited for “further evidence of continued progress” before raising rates.
Although, no rate hike in September boosted markets, some of its gains were pared following rising rate increase expectations in December. Moreover, Fed Chairwoman Janet Yellen’s comments fueled December rate hike chances even more. Yellen said "conditions in the labor market have strengthened” and although “inflation remains low” it is expected to reach the “2 percent objective over time."
She added that she expects a rate hike in 2016 if the labor market continues to progress and “there are no major risks that develop.” Her statements also indicated that the majority of the policymakers are rooting for a December rate increase.
Additionally, the BOJ opted to keep the key interest rate unchanged at a negative 0.1%. However, the central bank made a surprise change to its monetary policy framework. BOJ said it would try to control yield-curve and will adjust its purchasing volume of 10-year government bonds in order to keep bond yield near 0%.
Energy Gains as Inventories Decline
The U.S. Energy Information Administration (EIA) reported that the U.S. commercial crude oil inventories slumped 6.2 million barrels to 504.6 million for the week ended September 16, in contrast to analysts’ projections of an increase of 2.8 million barrels. Further, hopes of a production freeze by major oil producers also boosted oil prices.
WTI crude rose 2.9% to $45.34 per barrel. Brent crude also advanced 2% to $46.83 a barrel. Increase in oil prices led the Energy Select Sector SPDR (XLE) to rise 2.3% and emerge as the biggest advancer among the S&P 500 sectors. Dow components Chevron Corporation ( (CVX - Free Report) and Exxon Mobil Corporation (XOM - Free Report) increased 2% and 0.9%, respectively. Both of these companies possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Stocks That Made Headlines Today
Red Hat Beats on Q2 Earnings, Raises FY17 Outlook
Red Hat Inc. (RHT - Free Report) reported better-than-expected second-quarter fiscal 2017 results and raised its guidance for the fiscal. (Read More)
Jabil Q4 Earnings, Sales Top, Restructuring Begins
Jabil Circuit Inc. (JBL - Free Report) reported stronger-than-expected fourth-quarter fiscal 2016 results and declared its plans to realign its global capacity and administrative support infrastructure. (Read More)
ExxonMobil Merger Deal on Track, InterOil Shareholders Vote
ExxonMobil Corporation’s (XOM - Free Report) ) shares gained after its $2.5 billion bid to acquire Singapore's InterOil Corp. was approved by the shareholders of the latter. (Read More)
ABB Trims Power Grids Business, Divests Cables Unit to NKT
ABB Ltd. (ABB - Free Report) has decided to sell its global high-voltage cable system business to NKT Cables in a deal worth €836 million ($934 million). (Read More)
Pitney Bowes, Lighthouse Tie Up to Yield New Data Keys
Pitney Bowes Inc. (PBI - Free Report) has signed a new business alliance with Lighthouse Computer Services. (Read More)
Google Turns Smarter with AI-Based Digital Assistant Allo
Alphabet Inc.’s (GOOGL - Free Report) Google launched a “smart” messaging app Allo on Tuesday that is pitted against Facebook’s WhatsApp and Apple Inc.’s iMessage. (Read More)
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