By Anora M. Gaudiano, MarketWatch , Ryan Vlastelica
Dow has risen for five straight sessions, and closed at a record
four straight times
U.S. stocks mostly rose on Wednesday, with the Dow ending at a
record for a fourth straight session after the Federal Reserve
raised interest rates, as had been widely expected.
While the day's gains were broad, a sharp decline in financial
shares limited the broader market's advance and pushed the S&P
500 into slightly negative territory in the final minutes of
trading.
What are indexes doing?
The Dow Jones Industrial Average gained 80.63 points, or 0.3%,
to 24,585.43. The blue-chip average closed at a record trading and
extended its streak of positive sessions to a fifth straight
day.
The S&P fell 1.26 point to 2,662.85, a drop of less than
0.1%. The decline put an end to a four-day rise in the benchmark
index.
The Nasdaq Composite Index rose 13.48 points, or 0.2%, to
6,875.8.
The Russell 2000 index of small-capitalization shares was one of
the outperformers of the day, closing 0.5% higher, which was enough
to return the index to positive territory for the month of
December.
Financial stocks were the big losers of the day, with the sector
slumping 1.3%. Only two of the 67 components of the Financial
Select Sector SPDR ETF (XLF) ended in positive territory, according
to FactSet data. The fund itself fell 1.2% in its biggest one-day
percentage drop since early November.
Among the biggest drags, Bank of America Corp. (BAC) fell 1.6%
while J.P. Morgan Chase & Co.(JPM) ended down by 1.3%. Wells
Fargo & Co. (WFC) fell 1.5%.
The sector tends to outperform in periods of higher rates, and
it had risen in anticipation of the Fed meeting, up 6.7% over the
past month.
What drove the markets?
The Federal Reserve raised its benchmark federal-funds
(http://www.marketwatch.com/story/fed-raises-interest-rates-and-makes-few-changes-to-outlook-ahead-of-transition-to-powell-2017-12-13)
rate by a quarter percentage point to between 1.25% and 1.5%--its
fourth increase in a year. Senior officials also stuck to their
earlier projections of three rate increases in 2018.
In Janet Yellen's final news conference as Fed chairwoman
(http://blogs.marketwatch.com/capitolreport/2017/12/13/fed-decision-and-janet-yellen-press-conference-live-blog-and-video-3/),
she said the U.S. central bank expects the job market to remain
strong, though the pace of job growth should decelerate as the Fed
continues to tighten policy.
Read: At her final press conference, Yellen grades her tenure at
the Fed
(http://www.marketwatch.com/story/at-her-final-press-conference-yellen-grades-her-tenure-at-the-fed-2017-12-13)
The consumer-price index climbed 0.4% in November
(http://www.marketwatch.com/story/higher-gas-prices-boost-inflation-squeeze-paychecks-in-november-cpi-finds-2017-12-13),
matching the MarketWatch forecast. Three-quarters of the increase
reflected higher gas prices. However, core rate of inflation that
strips out food and energy rose a smaller 0.1%. The disappointment
in core inflation sent bond yields and the dollar lower.
Investors also digested the results of Alabama's Senate election
Tuesday night, where Democrat Doug Jones won in an upset victory
(http://www.marketwatch.com/story/doug-jones-defeats-roy-moore-in-contentious-alabama-senate-election-2017-12-12),
defeating controversial Republican Roy Moore. The victory will
shrink the Republican Senate majority, leaving the balance at
51-49. That has raised concerns that it will be harder for the
Republicans to push through major overhauls, such as tax reform,
and that the governing party will struggle in the 2018 midterm
elections.
However, the tax overhaul may not be threatened, as GOP leaders
in Congress are rushing to clear the tax legislation by early next
week before Jones arrives in Washington, a Wall Street Journal
report noted
(https://www.wsj.com/articles/democrat-doug-joness-win-in-alabama-senate-wont-affect-gop-tax-overhaul-1513139848).
Read:Here's why the Fed will hike interest rates on Wednesday
(http://www.marketwatch.com/story/heres-why-the-fed-will-hike-interest-rates-2017-12-11)
What are strategists saying?
"It was pretty much a certainty that the Fed was going to do
what it did. Sorry to be boring, but there were really no
surprises. It was a nonevent that had been fully priced into
markets," said Eric Green, senior portfolio manager and director of
research at Penn Capital Management.
Regarding the fact that Yellen will soon leave her role, Green
noted that "based on history, I would expect monetary policy to
remain fairly steady, although there is always the potential for
uncertainty."
Which stocks are in focus?
Among big winners on Wall Street were industrial and consumer
discretionary companies. Shares of Caterpillar Inc.(CAT) gained
3.6% while 3M Co. (MMM) rose 1.1%.
Mattel Inc.(MAT) was the biggest percentage gainer among
consumer discretionary stocks, rising 6.6%. It was followed by
Hasbro Inc.(HAS), which rose 3.7%.
Shares of CentruryLink Inc.(CTL) jumped 6.7% after analysts at
Morgan Stanley raised their price target. The stock is up 14% thus
far this week, largely thanks to a five-year contract with the
state of Pennsylvania to provide data networking services to its
employees.
Shares of 21st Century Fox, Inc.(FOX) dropped 3.8% amid concerns
over the prospect of a deal
(http://www.marketwatch.com/story/comcast-drops-out-of-21st-century-fox-bidding-leaving-disney-as-contender-2017-12-12)
with Walt Disney Co(DIS) Shares of Disney ended 0.2% higher.
What are other markets doing?
Stocks in Europe
(http://www.marketwatch.com/story/european-stocks-step-back-from-highest-in-5-weeks-but-retailers-gain-ground-2017-12-13)
traded lower, with the Stoxx Europe 600 index down 0.2% to 390.99.
Asian markets
(http://www.marketwatch.com/story/japans-nikkei-falls-as-chip-stocks-decline-yen-rises-2017-12-13)closed
mixed. Japan's Nikkei Stock Average (NIK.V) ended down 0.5% on
fresh declines in chip-related companies.
The dollar moved lower
(http://www.marketwatch.com/story/dollar-slips-after-democrats-senate-win-in-alabama-sparks-concerns-about-tax-bill-2017-12-13)
after the inflation data, with the ICE U.S. Dollar Index down 0.2%
at 93.903
The 10-year Treasury yield was at 2.353% extending its yield
decline following the Fed decision.
Oil prices fell 1% to settle at $56.60 a barrel
(http://www.marketwatch.com/story/oil-prices-rise-on-signs-of-falling-us-inventories-2017-12-13).
Gold futures closed up by 0.6% at $1,248.60 an ounce, as the U.S.
dollar retreated, following the Fed decision.
Bitcoin futures , meanwhile, fell to around the $16,500 mark
(http://www.marketwatch.com/story/bitcoin-futures-fall-below-18000-as-cryptocurrency-itself-drops-under-17000-2017-12-13)
in their third full day of trading, while the spot price for the
No. 1 digital currency around $16,363, falling in line with the
futures price.
(END) Dow Jones Newswires
December 13, 2017 16:39 ET (21:39 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.