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Mar 15, 2017

Wall Street at Close Report on March 15, 2017: Dow Closes Up Triple Digits After Fed Raises Rates
Evelyn Cheng
U.S. stocks closed higher Wednesday, helped by a bounce in oil prices, after the Federal Reserve took a less aggressive stance than expected. The central bank did raise interest rates, as expected.
The Dow Jones industrial average added more than 100 points following the statement release. UnitedHealth contributed the most to gains. Apple had the third-greatest positive impact on the Dow and hit a fresh intraday record. The Nasdaq 100 also touched a fresh all-time intraday high.
"Most people were expecting a much more hawkish statement," said Diane Swonk of DS Economics.
"The dissent along with the waffling language on inflation, even though the economic language was strong," indicated continuation of gradual policy, she said.
Shorter-end Treasury yields came off session highs. The 2-year yield fell to 1.32 percent, about its lowest in a week. Earlier in the session, the yield hit a high of 1.401 percent, its highest since June 11, 2009. The 10-year yield traded around 2.58 percent as of 2:01 p.m.
"It was a little bit of a relief rally in bonds. ... There was some nervousness the Fed would be a little more aggressive than suspected," said Bryce Doty, senior fixed income manager with Sit Investment Associates.
However, he expects "this decline in yields is going to be short-lived. If the Fed just raises rates two times [this year], there's no way the two-year yield could be at 1.32 percent."
The U.S. dollar index extended losses to trade about half a percent lower, hitting its lowest since Feb. 28. The euro traded around $1.067 and the yen near 113.9 yen against the greenback.
Energy traded more than 1 percent higher to lead S&P 500 advancers as oil reversed a seven-day losing streak. U.S. crude oil futures settled up 2.39 percent at $48.86 a barrel after weekly crude inventory data showed a drawdown in stockpiles.
Semiconductor stocks reversed earlier losses, with the iShares PHLX Semiconductor ETF (SOXX) 0.6 percent higher in afternoon trade.
Traders widely expected the Fed to raise interest rates Wednesday. The Federal Open Market Committee was set to release its meeting statement at 2 p.m., ET. Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 p.m.
Traders on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Traders on the floor of the New York Stock Exchange.
In economic news, the consumer price index rose 0.1 percent in February for a 2.7 percent increase over the last 12 months, the biggest year-on-year gain since March 2012, Reuters said. Ex-food and energy costs, the so-called core CPI rose 2.2 percent in the 12 months through February.
"I don't think inflation will move up very rapidly from here but it's clear inflation is steadily moving up," said David Kelly, chief global strategist at JPMorgan Asset Management.
Retail sales posted a 0.1 percent rise last month, the weakest print since August, according to Reuters. Excluding automobiles, gasoline, building materials and food services, the so-called core retail sales rose 0.1 percent after an upwardly revised 0.8 percent jump in January.
Both CPI and retail sales mostly matched expectations.
The Empire State Manufacturing Index edged lower to 16.4 for March. The new orders index climbed eight points to 21.3, its highest level since 2009, according to the New York Fed.
A separate report showed home builder sentiment hit 71 in March, its highest in 12 years.
Business inventories rose 0.3 percent in January.


DJIA Dow Industrials 20950.10
112.73 0.54%
S&P 500 S&P 500 Index 2385.26
19.81 0.84%
NASDAQ NASDAQ Composite 5900.05
43.23 0.74%
Traders are also keeping an eye on Wednesday's general elections in the Netherlands for any indication on the strength of populist sentiment.
The STOXX Europe 600 rose about 0.4 percent in morning trade ET.
The Shanghai composite closed up 0.08 percent, while the Nikkei 225 fell 0.16 percent.
In mid-morning trade, the Dow Jones industrial average climbed 40 points, or 0.19 percent, to 20,877. UnitedHealth had the greatest positive impact, while IBM had the greatest negative impact.
The S&P 500 added 6 points, or 0.28 percent, to 2,372, with energy leading nine sectors higher and information technology and consumer discretionary the only decliners.
The Nasdaq composite rose 6 points, or 0.1 percent, to 5,862.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell to trade near 11.8.
About five stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 34 million and a composite volume of 67 million in the open.
U.S. crude oil futures for April delivery added 90 cents to $48.62 a barrel on the New York Mercantile Exchange as of 10:42 a.m., ET.
Gold futures for April delivery fell $2.20 to $1,200.40 an ounce.
On tap this week:
Earnings: Oracle, Guess, Jabil Circuits
2:00 p.m. FOMC statement, economic projections
2:30 p.m. Fed Chair Janet Yellen briefing
Earnings: Adobe Systems, Dollar General, JA Solar, Vivant Solar
8:30 a.m. Jobless claims
8:30 a.m. Housing starts
8:30 a.m. Building permits
8:30 a.m. Philadelphia Fed survey
10:00 a.m. JOLTS
Earnings: Tiffany
9:15 a.m. Industrial production
9:15 a.m. Capacity utilization
10:00 a.m. Consumer sentiment
*Calendar subject to change.