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After dipping lower marginally on Wednesday, major U.S. benchmarks made rebounded yesterday to finish near record high levels. Most of yesterday’s gains came on the back of encouraging domestic economic data and Fed Chairwoman Janet Yellen’s testimony, which indicated that a rate hike after next month’s policy meeting is definitely on the table. While rising rate-hike chances boosted financial stocks, consumer discretionary sector got a boost from robust economic data and encouraging earnings results.

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 0.2%, to close at 18,903.82. The S&P 500 gained nearly 0.5% to close at 2,187.12. The tech-laden Nasdaq Composite Index closed at 5,333.97, rising 0.7%. Meanwhile, the fear-gauge CBOE Volatility Index (VIX) declined 2.7% to settle at 13.35. A total of around 7.4 billion shares were traded on Thursday, lower than the last 20-session average of 7.9 billion shares. Advancers outpaced declining stocks on the NYSE. For 51% stocks that advanced, 46% declined.

Yellen Testimony & Robust Economic Data

In her testimony in front of the House-Senate Joint Economic Committee, Yellen indicated that the chances of a rate hike in the near term have increased significantly in recent times. She said that “an increase could well become appropriate relatively soon” as labor market continued to strengthen with significant pick up in wages and stable unemployment rate. She also added that inflation is gradually progressing towards the Fed’s 2% target and “near-term risks to the outlook were roughly balanced”.

This led December rate hike expectations to increase further as most of the traders are now betting on a rate increase next month. As per the FedWatch tool of CME Group, the expectations about a next month hike are currently around 90%. This had a positive impact on the financial stocks. The Financial Select Sector SPDR ETF (XLF) rose 1.4% and emerged as the top performer among the broader S&P 500 sectors. Key stocks from the sector including Bank of America Corporation (BAC - Free Report) , Wells Fargo & Company (WFC - Free Report) and Citigroup Inc. (C - Free Report) gained 1.7%, 1.6% and 1.5%, respectively.

Separately, the Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose at a pace of 0.4% last month, its highest increase in past six months, on the back of significant increase in gasoline prices. CPI also came ahead of the consensus estimate of 0.3% rise. Meanwhile, core-CPI increased at slower rate of 0.1% in October. Meanwhile, jobless claims for the week ending Nov 12 hit the 43-year low level of 235,000, significantly below the consensus estimate of 257,000.

Moreover, the U.S. Department of Commerce reported that housing starts soared 25.5% from September to 1,323,000, hitting their highest level since Aug 2007. This was also higher than the consensus estimate of 1,161,000. Also, building permits gained 0.3% and 4.6% from September and year-ago level, respectively, to 1,229,000, outpacing the consensus estimate of 1,202,000.

Encouraging housing data led shares of The Home Depot, Inc. (HD - Free Report) to gain 2.9% and was one of the biggest gainers among the Dow components. Additionally, shares of Best Buy Co., Inc. (BBY - Free Report) surged 13.7% after reporting better-than-expected third quarter earnings results. It was best gainer among the S&P 500 companies yesterday. (Read More)

Strong gains in Home Depot and Best Buy helped the Consumer Discretionary Select Sector SPDR (XLY) emerge as the second biggest gainer among the S&P 500 sectors and it closed 1.2% higher. Other key stocks from the sector including Comcast Corporation (CMCSA - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and NIKE, Inc. (NKE - Free Report) gained 1.5%, 1.3% and 1.8%, respectively. While Best Buy holds a Zacks Rank #2 (Buy), Home Depot, Comcast, Amazon and NIKE carry 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

Gap’s (GPS) Q3 Earnings Meet, Soft Sales & View Hurt Stock

After delivering a positive earnings surprise in the last quarter, The Gap Inc. (GPS) returned to its old trend of posting in-line earnings in third-quarter fiscal 2016. (Read More)

Tesoro Set to Snap Up Western Refining in $6.4 Billion Deal

Downstream operator Tesoro Corp. (TSO) has agreed to acquire El Paso, TX-based fellow oil refiner Western Energy Inc. (WNR) for about $6.4 billion. (Read More)

Ross Stores (ROST) Q3 Earnings & Revenues Beat, Stock Up

Shares of Ross Stores Inc. (ROST) rose 3.4% in the after-hours trading session on Nov 17, after the company reported robust third-quarter fiscal 2016 results. (Read More)

Citigroup (C - Free Report) to Sell Subprime Lending Unit in Canada

Citigroup Inc. (C - Free Report) entered into an agreement to sell CitiFinancial, its subprime lending unit in Canada, to an investor group led by private investment firm, JC Flowers and Värde Partners. (Read More)

Petrobras (PBR) to Lower Debt with Liquigás Distribuidor Sale

Brazil's state-run energy giant Petroleo Brasileiro S.A. or Petrobras (PBR) recently announced its decision to divest Liquigás Distribuidora SA for $819 million. (Read More)

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