Carla Mozee, Wallace Witkowski
After a pullback following the Fed decision Wednesday, stock-market indexes resumed their post-election march higher. The Dow Jones Industrial Average DJIA, +0.30% rose 59.71 points, or 0.3%, to close at 19,852.24, after being up by as many as 159 points earlier in the session and less than 50 points from the psychologically important 20,000 level. Shares of DuPont DD, +1.60% J.P. Morgan Chase & Co. JPM, +1.50% and Goldman Sachs Group Inc. GS, +1.28% led gainers.
The S&P 500 index SPX, +0.39% closed up 8.75 points, or 0.4%, at 2,262.03, after being up by nearly 19 points earlier, with nine of the 11 main sectors finishing higher. Financials led gainers, rising 1%, and materials advanced 0.7%.
The Nasdaq Composite Index COMP, +0.37% gained 20.18 points, or 0.4%, to finish at 5,456.85, after a 48-point gain earlier in the session.
On Wednesday, the U.S. central bank lifted its key short-term rate to a range of 0.5% to 0.75%, from the previous 0.25% to 0.5%. It is also now planning three rate hikes in 2017, compared with the two hikes it had previously mapped out.
“The market can withstand more rate hikes as long as the economic growth is underpinning it,” said Quincy Krosby, a market strategist at Prudential Financial. “If we don’t see the corresponding growth or the promised fiscal spending over the next few months, we are sure to see some repricing.”
The rise in stocks also preceded Friday’s so-called quadruple witching — when stock-index futures, stock-index options, stock options and single-stock futures expire — which tends to boost buying appetite.
Some analysts suggested that better-than-expected economic releases were driving gains on Wall Street.
Weekly initial jobless claims fell by 4,000 to 254,000 last week, reflecting the extremely low level of layoffs taking place in the economy. The consumer price index rose 0.2% last month, driven by rising rents and more expensive gas.
Home-builder confidence soared in December to a level last seen at the heights of the housing bubble, while two gauges of manufacturing sentiment — the Philly Fed and Empire State indexes — climbed in December, another indication of the upbeat corporate mood in the wake of President-elect Donald Trump’s surprise victory.
“The market and the Fed are a lot more aligned about the future path of rate hikes going into 2017, while the economy is in a much better shape than it was a year ago. This suggests that there will be less risk of major surprise moves by the Fed,” said Liz Ann Sonders, chief investment strategist at Charles Schwab & Co.
While equities fell on Wednesday, stocks have surged since the presidential election in November. The gains have been attributed to expectations that Trump’s policy proposals, such as tax cuts and deregulation, will spur economic growth. As a result, the Dow has been stepping closer to the key psychological level of 20,000, and major indexes have been hitting a series of record closes.
Read: What Dow 20,000 will — and won’t — mean for investors
After the Fed decision, the market disregarded Fed chief Janet Yellen’s view that the shift in the so-called “dot plot” was small, and not all members actually agree that rates need to rise next year. However, “animal spirits” unleashed by Trump “have won the day,” said Kathleen Brooks, research director at City Index, in a note Thursday.
“The view seems to be that Trump will deliver on his fiscal stimulus promise, the economy will expand sharply, inflation will rise, and the Fed will need to hike rates more than currently forecast, but not by enough to lead to a serious stock market selloff,” she wrote.
Gold prices GCG7, +0.26% settled down 2.9% to $1,129.80 an ounce, a level not seen since February. Assets without a fixed yield, such as gold, tend to become less attractive as interest rates rise.
In addition, higher interest rates tend to boost the dollar, which in turn puts pressure on commodities priced in the greenback. The U.S. dollar index DXY, -0.01% jumped to a 14-year high on Wednesday after the Fed announcement and continued to gain ground Thursday, rising 1.4% to 103.16.
Meanwhile, 10-year Treasury yields TMUBMUSD10Y, -0.23% rose to 2.6%, the highest since September 2014.
Stocks to watch: Yahoo Inc. YHOO, -6.11% shares fell 6.1% after the online services company disclosed another security breach that could affect more than 1 billion users. Meanwhile, exchange-traded funds for cybersecurity stocks saw gains.
Xilinx Inc. XLNX, +6.08% shares rallied 6.1% following an upgrade to overweight from Morgan Stanley.
Mondelez International Inc. MDLZ, +4.39% closed up 4.4% higher following reports that foods giant Kraft Heinz Co. KHC, +1.20% was considering buying the snack maker, whose brands include Oreo and Ritz. But Bloomberg late Wednesday reported that Kraft isn’t in talks to purchase Mondelez.
Airline stocks were among the top performers on the S&P 500. United Continental Holdings Inc. UAL, +2.54% gained 2.5% while Delta Air Lines DAL, +1.36% and American Airlines AAL, +0.79% closed higher.
DeVry Education Group Inc. DV, +2.92% shares rose 2.9% after the for-profit education company said its settlement with the Federal Trade Commission won’t impact access to federal student loans.
Other markets: European stocks SXXP, +0.86% stepped higher, with bank shares FX7, +2.48% gaining. In Asia ADOW, +0.25% stocks finished mostly lower, leaving Hong Kong’s Hang Seng Index HSI, +0.29% down 1.8%.
Oil futures CLF7, +0.59% settled 0.3% lower at $51.10 a barrel.