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Stock Market News for Dec 12, 2019

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Benchmarks ended a two-day losing streak on Wednesday after the Federal Reserve announced plans to hold interest rates steady. Such developments lifted investor’s sentiment, thereby leading the major indices to close in green.

The Dow Jones Industrial Average (DJI) rose 0.1% or 29.58 points, to close at 27,911.30. The S&P 500 added 9.11 points or 0.3%, to close at of 3,141.63. Meanwhile, the Nasdaq Composite Index closed at 8,654.05, rising 37.87 points, or 0.4%. The fear-gauge CBOE Volatility Index (VIX) decreased 0.4% to close at 14.93. Advancers outnumbered declining issues on the NYSE by a 1.76-to-1 ratio, while a 1.25-to-1 ratio favored advancers on Nasdaq.

How Did the Benchmarks Perform?

After a straight two-day loss, benchmarks recovered on Wednesday as the Federal Reserves announced to hold interest rates steady, indefinitely.

The S&P 500 has gained 25.2% so far this year, with stocks hitting record highs. However, in Wednesday’s session, the Materials Select Sector SPDR Fund (XLB) and the Technology Select Sector SPDR Fund (XLK) were the highest gainers, rising 0.8% and 0.7%, respectively.

On the other hand, the Dow was lifted with gains in The Walt Disney Company (DIS - Free Report) and United Technologies Corporation (UTX - Free Report) , both the stocks rose 1%. But, The Home Depot, Inc. (HD - Free Report) drop of 1.8% checked the index from climbing furture.

Disney, United Technologies and Home Depot carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Overall, the S&P 500 posted 25 new 52-week highs and one new low. While, the Nasdaq Composite recorded 86 new highs and 53 new lows.

Fed to Hold Interest Rates Steady

On Wednesday, the Federal Reserve unanimously voted to leave interest rates unchanged in the range of 1.5% and 1.75%. In fact, post the year-end policy meeting in Washington, Chairman Jerome Powell signaled that it will leave rates unchanged through the end of 2020. Powell said he needs to “see a sustained increase in inflation before raising the cost of borrowing.”

Fed officials also believe that the three successive rate cuts since July has protected the economy from the protracted U.S.-China trade war that has hampered business investment, harmed exports and led the manufacture sector to contract. The rate cuts have helped the economy to stabilize and the chance of recession.

In the press conference, Powell said, “Policy is somewhat accommodative” and the monetary policy is appropriate to sustain economic expansion with a 2% target on inflation boosted by strong labor markets.

Economic Data

On Dec 11, the government said that the consumer price index rose 0.3% in November beating the consensus estimate of 0.2% rise. American households had paid more for energy, health care and rent in November, which helps the rate of inflation jump to the highest level in a year.

This increase in spending has increased the cost of living from 1.8% to 2.1%, over the past 12 months. Rent and medical care cost gained 0.3% each, and there were minute rise in price food, clothes, education and used vehicles.

However, there was a drop in price of new cars and trucks for fifth month in a row and airfares also registered decline. Moreover, the core rate cam in unchanged at 2.3%, this measure of inflation omits food and energy cost.

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