While you were sleeping: Wall St rallies as Fed gathers

Wednesday 13th December 2017

Wall Street gained, sending the Dow and the S&P 500 to record highs, as investors prepared for the Federal Reserve’s third interest rate increase this year, widely expected to be announced on Wednesday.

To be sure, the Nasdaq Composite Index slipped, down 0.1 percent in afternoon trading.

In 1.31pm trading in New York, the Dow Jones Industrial Average climbed 0.6 percent. In 1.16pm trading, the Standard & Poor’s 500 Index rose 0.3 percent.

“You’re going to see rotation when you go into the end of the year,” Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, told Reuters. “Some of the profits were taken off the table for big winners such as technology and into sectors that have not done as well, such as finance and energy.”

The Federal Open Market Committee began its two-day meeting, which will be followed by a statement and forecasts, as well as a press conference by Chair Janet Yellen, on Wednesday.

Meanwhile, a Labour Department report showed US producer prices rose 0.4 percent in November from the previous month, more than economists had expected, while PPI climbed 3.1 percent from a year earlier, the biggest gain since January 2012.

“PPI final demand prices are rising 3 percent, and this will give Fed officials that are cautious on the inflation outlook the confidence to raise rates this week knowing that core consumer inflation will start moving back up to its 2 percent target,” Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in an email, Bloomberg reported.

The Dow touched a record high of 24,552.97, while the S&P 500 climbed to a record of 2,669.72.

The Dow climbed, led by gains in shares of Goldman Sachs and those of Boeing, both recently up 2.7 percent. Bucking the trend in the Dow were shares of Intel and those of Chevron, recently down 0.5 percent and 0.4 percent respectively.

Shares of Boeing rose after the company said it will increase its quarterly dividend by 20 percent and replace the existing share repurchase program with a new US$18 billion authorisation.

“Boeing's strong and growing cash flow allows us to deepen our commitment to provide competitive returns to our shareholders, while continuing to invest in our people, innovation and growth," Boeing Chief Executive Officer Dennis Muilenburg said in a statement. "To support our balanced cash deployment strategy, our team remains focused on improving operating performance as we deliver on our substantial order backlog and work to capture a larger share of the growing aerospace market.”

In Europe, the Stoxx 600 Index ended the day with a 0.6 percent increase from the previous close. Germany’s DAX Index gained 0.5 percent, the UK’s FTSE 100 Index rose 0.6 percent, while France’s CAC 40 Index rallied 0.8 percent.

(BusinessDesk)

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