KO Coca Cola Company

By Joseph Adinolfi and Sara Sjolin, MarketWatch

Investors focus on Wednesday's Fed's interest-rate decision

The Dow Jones Industrial Average opened at a fresh record high on Tuesday as the blue-chip gauge continued its march toward 20,000.

Investors remain fixated on the Federal Reserve's interest-rate decision due Wednesday, with little in the way of important U.S. economic data.

Investors are pricing in a nearly 100% chance of a hike on Wednesday, but it is the tone of the Fed's statement, as well as its latest batch of economic forecasts, that will be closely scrutinized for clues to the central bank's plans for 2017, said James Abate, chief investment officer at Centre Asset Management.

"It's really going to be expectations for commentary from the Fed related to the pace of rate increases in 2017," Abate said.

See:Yellen to tell the markets to 'cool your jets' (http://www.marketwatch.com/story/yellen-to-tell-the-markets-to-cool-your-jets-2016-12-12)

The Dow climbed 106 points, or 0.6%, to 19,905. If the Dow finishes higher, it will notch its seventh straight gain. Sharp rises in shares of Apple Inc.(AAPL), UnitedHealth Group Inc. (UNH), and Goldman Sachs Group Inc. (GS), were contributing the most to the rise in the stock gauge. Shares of 3M Co.(MMM) and Coca-Cola Co. (KO) were the only early laggards.

The benchmark on Monday bucked a negative trend across the U.S. stock markets and closed at an all-time high (http://www.marketwatch.com/story/dow-20000-within-sight-but-caution-over-fed-wont-make-it-easy-2016-12-12).

U.S. stocks have rallied aggressively since President-elect Donald Trump defeated Democrat Hillary Clinton in an upset victory in the Nov. 8 U.S. election. Investors are betting that Trump's proposed policies, including corporate tax cuts, infrastructure spending and deregulation, will be unequivocally pro-business, if passed.

Read:Time to cash in your bank stocks, going by this chart (http://www.marketwatch.com/story/time-to-cash-in-your-bank-stocks-going-by-this-chart-2016-12-13)

(http://www.marketwatch.com/story/time-to-cash-in-your-bank-stocks-going-by-this-chart-2016-12-13)These expectations have increased investors' willingness to embrace risky assets like stocks, said Mike Antonelli, equity sales trader at R.W. Baird & Co.

"The move is not a head fake. The kind of strength and resilience we've seen since the election has diminished the notion that this might be [temporary]," Antonelli said. "I think the rally will continue through year-end."

See:Is stock-market 'Trumpophoria' running out of room? (http://www.marketwatch.com/story/is-stock-market-trumpophoria-running-out-of-room-2016-12-12)

(http://www.marketwatch.com/story/is-stock-market-trumpophoria-running-out-of-room-2016-12-12)Antonelli said he doesn't expect the Dow to surpass the 20,000 milestone on Tuesday, but believes it will happen before New Year's.

Read:5 things to know about the Dow's attempt to rally to 20,000 and beyond (http://www.marketwatch.com/story/5-things-to-know-about-the-dows-attempt-to-rally-to-20000-and-beyond-2016-12-12)

Meanwhile, the S&P 500 index gained 10.45 points, or 0.5%, to 2,267, with all 11 sectors in the green, led by a more than 1% rise in technology and a 0.9% advance in telecommunications.

The tech-heavy Nasdaq Composite Index added 48 points, or 0.9%, to 5,461.

Both the S&P 500 index and Nasdaq Composite ended lower on Monday, with investors appearing reluctant to push shares higher ahead of the Fed meeting.

U.S. stocks also benefited from an uptick in demand for risky European assets. Earlier, UniCredit said it plans to shed EUR17.7 billion ($18.9 billion) in bad debt (http://www.marketwatch.com/story/unicredit-looks-to-raise-14-bln-cut-14000-jobs-2016-12-13). The move, which will help to restore Italy's largest lender to health, assuaged fears about Italy's troubled banking sector. The European Stoxx 600 (http://www.marketwatch.com/story/italian-stocks-lead-european-equities-back-to-11-month-high-2016-12-13) was up 0.7% to 256.33. Asian markets closed slightly higher (http://www.marketwatch.com/story/asian-markets-largely-flat-ahead-of-fed-meeting-2016-12-12).

Fed meeting: The central bank kicks off its two-day policy-setting meeting on Tuesday and will deliver its rate announcement on Wednesday at 2 p.m. Eastern Time. The bank is widely expected to raise its benchmark rate by 25 basis points, so the big question for traders is how hawkish or dovish the statement will be.

"Stock traders appear to be betting on a dovish Fed," said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in emailed comments.

Read:Look for the Fed to hike rates and to ignore the elephant in the room (http://www.marketwatch.com/story/fed-to-hike-interest-rates-next-week-while-ignoring-the-elephant-in-the-room-2016-12-09)

The dollar inched higher (http://www.marketwatch.com/story/dollar-eases-slightly-vs-yen-as-some-say-rally-may-be-running-out-of-steam-2016-12-13) against most other major currencies, with the ICE U.S. Dollar index, a widely watched gauge of the greenback's strength against a basket of six prominent rivals, rose 0.1% to 101.11, leaving it just shy of its highest levels since 2003.

Oil prices extended their gains on Tuesday, with crude futures traded on the New York Mercantile Exchange (http://www.marketwatch.com/story/oil-prices-slip-as-investor-doubts-grow-about-opecs-plans-to-cut-production-2016-12-13) rising 0.5% to $53.07 a barrel after the International Energy Agency lifted its demand forecasts (http://www.marketwatch.com/story/opec-output-at-record-high-as-deal-was-struck-iea-2016-12-13) for 2016. Metals were mostly lower.

Commitments by members of the Organization of the Petroleum Exporting Countries, and a host of nonmember exporters, to cut oil production have boosted oil prices in recent days.

Strong readings on Chinese industrial production and retail sales provided more evidence that the world's second-largest economy steadied in November, helping to boost global risk sentiment.

See:Will oil output cuts work? Watch these 7 factors (http://www.marketwatch.com/story/will-oil-output-cuts-work-watch-these-7-things-2016-12-12)

In other economic news on Tuesday, the NFIB small-business index jumped by the largest monthly amount in more than seven years (http://www.marketwatch.com/story/small-business-sentiment-surges-after-republican-sweep-2016-12-13) in November on optimism Trump's administration will spur an increase in business activity.

Movers and shakers: Energy shares, including Chesapeake Energy Corp.(CHK) and Noble Energy Inc.(NBL), received a boost from the oil-price rally.

U.S.-listed shares of Unilever PLC(ULVR.LN) (ULVR.LN) climbed 1.8% after Jefferies upgraded the consumer products company to buy from hold.

Inovalon Holdings Inc.(INOV) sank 35% after the data-analytics company late Monday slashed its yearly guidance.

VeriFone Systems Inc.(PAY) shares fell 0.6% Tuesday despite topping Wall Street estimates (http://www.marketwatch.com/story/verifone-shares-tick-higher-as-earnings-beat-outlook-misses-2016-12-12) for the quarter in an earnings report released late Monday.

U.S.-listed shares of Anheuser-Busch InBev SA(ABI.BT) (ABI.BT) added 1.2% after news Asahi Group Holdings Ltd. (2502.TO) will buy five Eastern European beer brands (http://www.marketwatch.com/story/asahi-to-pay-78-bln-for-5-ab-inbev-beer-brands-2016-12-13-44853827) from the brewer.

Apple Inc.(AAPL) rose 0.6% after The Wall Street Journal reported that the tech giant is eager to invest in a $100 billion fund (http://www.marketwatch.com/story/apple-said-to-be-interested-in-softbanks-100-billion-tech-fund-2016-12-12) being raised by Japanese internet and telecommunications giant SoftBank Group Corp. (9984.TO).

Wal-Mart Stores Inc.(WMT)shares rose 0.6% even after U.K. supermarket chain Asda, a subsidiary of Wal-Mart, saw its market share fall to 15.3%, from 16.2% for the comparable 12 weeks.

Read: Wal-Mart shares are poised for more gains, but could Trump spoil the party? (http://www.marketwatch.com/story/wal-mart-shares-poised-for-more-gains-but-could-trump-spoil-the-party-2016-12-13)

(END) Dow Jones Newswires

December 13, 2016 09:54 ET (14:54 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.