The Fed hiked its benchmark rates on Wednesday, as was widely expected, helping most benchmarks finished in the green. Even though the Dow notched up a record close, the S&P 500 closed in the red after financials tanked. Meanwhile, Democrat Doug Jones won elections in Alabama, disturbing the Republican majority in the Senate.
The Dow Jones Industrial Average (DJIA) increased 0.3%, to close at 24,585.43. The S&P 500 Index (INX) declined 0.05% to close at 2,662.85. The tech-laden Nasdaq Composite Index (IXIC) closed at 6,875.8, gaining 0.2%. Advancers outnumbered decliners on the NYSE by a 1.31-to-1 ratio. On Nasdaq, a 1.83-to-1 ratio favored advancing issues. The CBOE VIX increased 0.1% to close at 9.9.
Fed Hikes the Benchmark Interest Rate
The Federal Reserve finally increased its benchmark interest rate on Wednesday by a quarter percentage point. The new rate of interest will hover between 1.25% and 1.5%. This marks the fourth rate hike by Fed in a year’s time. Further, central bank officials reiterated their earlier projection of three possible rate hikes in 2018. Central bankers reasoned that a hike in interest rate would actually prevent the economy from overheating and negate the effects of a sudden increase in inflation.
Also, the central bank did not alter its initial forecast for inflation. The Fed projects a gradual increase in inflation with officials forecasting that the year will end with inflation levels still below 2%. This also marked Janet Yellen’s last news conference as the Fed Chief before her term ends in February next year.
Doug Jones’ Win Upsets Republican Advantage on Tax Bill
Democrat candidate Doug Jones won the Senate elections in Alabama late on Tuesday. defeating Republican Roy Moore. His victroy actually upset the Republican majority in the Senate, required to push through the Tax Bill. Earlier in the month, U.S. Senate Republicans approved the much awaited tax Bill to be passed in the Senate. These developments weighed on investor sentiment.
How Did the Benchmarks Perform?
The Dow advanced 80.6 points on Wednesday to post its fifth straight day of gains and notching up a record close in the process. Such gains were buoyed by an increase in shares of Caterpillar (CAT - Free Report) , which surged 3.6% in intraday trade. Moreover, Fed’s decision to hike the interest rate also boosted gains for the Dow.
The S&P 500 decreased 1.26 point to end in the negative territory, ending its four–day streak of gains. Of the 11 major segments of the S&P 500, four ended in the positive territory, with financials leading the decliners. The Financial Select Sector SPDR ETF (XLF) declined 1.2% and weighed on the S&P 500. Financial stocks such as Bank of America (BAC - Free Report) , JP Morgan (JPM - Free Report) and Wells Fargo (WFC - Free Report) all declined 1.6%, 1.3% and 1.5%, respectively and led the S&P 500 lower. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Meanwhile, the Nasdaq posted modest gains after increasing 13.5 points. Gains for the tech-heavy index were broad based.
The consumer price index (CPI) for November came in at 0.4%, in line with the consensus estimate. Meanwhile, Core CPI came in at 0.1%, below the consensus estimate of 0.2%. Increasing oil prices led to a surge in the cost of living for the average consumer and this led to an increase in the CPI. Moreover, higher rents and increased spending on new and used cars also spiked the CPI last month.
Stocks That Made Headlines
Target to Acquire Shipt to Augment Online Delivery Services
With the objective of capitalizing on the booming online shopping, Target Corporation (TGT - Free Report) has announced its intention to buy Shipt, Inc., a same-day delivery platform. (Read More)
EQT Releases Update on Capex, Production and Operations
EQT Corporation (EQT - Free Report) has released capital expenditure and production forecasts for 2018. (Read More)
JetBlue Boosts Shareholder Returns, OK's Share Buyback
In a move to further enhance shareholders' wealth, JetBlue Airways Corporation’s (JBLU - Free Report) board of directors approved a new share repurchase program. (Read More)
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>