The Dow and the S&P 500 closed at all-time record highs on Tuesday as investors remained optimistic that the tax reforms might soon be implemented. Market watchers also closely followed the two–day FOMC meeting on a possible rate hike this month, which begun on Tuesday. Meanwhile, the Nasdaq incurred losses after semiconductor stocks tanked. Finally, the index of small-business optimism hit its second best reading in 44 years.
The Dow Jones Industrial Average (DJIA) increased 0.5%, to close at 24,504.80. The S&P 500 Index (INX) rose 0.2% to close at 2,664.11. The tech-laden Nasdaq Composite Index (IXIC) closed at 6,862.32, losing 0.2%. A total of 6.5 billion shares were traded on Tuesday, lower than the last 20-session average of 6.52 billion shares. Decliners outnumbered advancers on the NYSE by a 1.19-to-1 ratio. On Nasdaq, a 1.26-to-1 ratio favored declining issues. The CBOE VIX increased 4.9% to close at 9.8.
Tax Reforms and FOMC Meet Boost the Markets
Optimism around higher likelihood of the Tax Bill to be soon implemented into law boosted the broader market. Prospects of a tax overhaul in the United States have been the primary catalyst of market growth so far this year. Earlier in the month, U.S. Senate Republicans approved the much awaited tax Bill to be passed in the Senate.. This event has renewed optimism around the tax reforms.
Moreover, the FOMC two-day meet started on Tuesday. Market watchers expect policymakers of the Fed to announce the decision on a possible rate hike this month at 2PM ET on Wednesday. Experts are almost confident that there would be one final hike in interest rate this year. But, investors rather want to know about the future of monetary tightening in 2018. Coincidentally, this happens to be Janet Yellen’s last conference as the Fed Chief, with her term set to terminate in February next year.
What Are the Benchmarks Doing?
The S&P 500 amassed 4.12 points to notch up all-time intraday and closing records. Of the 11 major segments of the S&P 500, eight ended in the positive territory, with financials and real estate leading the advancers. The Real Estate Select Sector SPDR (XLRE) and Financial Select Sector SPDR ETF (XLF) gained 0.5% and 1%, respectively.
Meanwhile, the Dow surged 118.8 points to end in the green. The blue-chip index also hit all-time intraday and closing records. Shares of Boeing (BA - Free Report) and Verizon (VZ - Free Report) gained 2.4% and 2.6%, respectively and were the biggest contributors to the Dow’s rally. Both the companies possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Finally, the Nasdaq plunged 12.8 points to finish in the negative territory. Such losses were incurred after the tech sector tanked due to losses for the semiconductor stocks. The Philly Semiconductor Index (SOX) lost 1% to finish at 1233.18.
On the economic data front, the producer-price index (PPI) surged 0.4% in November, in line with the consensus estimate of the period. Meanwhile, the Core PPI rose 0.3%, lower than the consensus estimate of an increase of 0.2% for the month of November.
The National Federation of Independent Business reported that the index of small-business optimism increased 3.7 points to 107.5 in November. This marks its second-highest level in as many as 44 years. Such a reading is indicative of the fact that owners of small businesses are highly optimistic of the current economic conditions which are broadly encouraging and are also hopeful of a tax overhaul in the U.S.
Stocks That Made Headlines
Why Did Kosmos Energy (KOS - Free Report) Stock Plummet 14% Yesterday?
Oil and gas exploration company, Kosmos Energy Ltd. (KOS - Free Report) witnessed a 13.9% decline in the last session amid heavy trade following the news of the company’s failure to find a significant amount of oil and gas at its Lamantin-1 exploration well offshore Mauritania. (Read More)
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>