Stocks Up Midday; Rate Hike Expected 12/13 12:47
U.S. stocks moved higher in afternoon trading Wednesday, driven by gains in
industrial and health care companies.
(AP) -- U.S. stocks moved higher in afternoon trading Wednesday, driven by
gains in industrial and health care companies. Banks lagged the most. Energy
stocks also fell as the price of crude oil headed lower. Smaller company stocks
notched some of the biggest gains after the GOP leadership in the House and
Senate reached a deal on a tax package. Traders were also looking ahead to an
afternoon announcement on interest rates from the Federal Reserve.
KEEPING SCORE: The Standard & Poor's 500 index rose 2 points, or 0.1
percent, to 2,666 as of 1:31 p.m. Eastern Time. The Dow Jones industrial
average gained 95 points, or 0.4 percent, to 24,600. The Nasdaq added 12
points, or 0.2 percent, to 6,874. The Russell 2000 index of smaller-company
stocks picked up 8 points, or 0.6 percent, to 1,524. The S&P 500 and the Dow
have closed at all-time highs the past two days.
TAX DEAL: Republican leadership in the House and Senate forged an agreement
Wednesday on a sweeping overhaul of the nation's tax laws. The move paves the
way for final votes next week to slash taxes for businesses and give many
Americans modest tax cuts starting next year. The news helped boost shares in
"If you look at the mix today, small caps are doing better than large caps,"
said Sameer Samana, global technical and equity strategist for Wells Fargo
Investment Institute. "Clearly, they would be the better beneficiaries because
they tend to pay higher tax rates."
FED WATCH: The Fed is widely expected to raise its key short-term interest
rate for the third time this year as the U.S. economy strengthens. Investors
appear confident that the economy can withstand a gradual increase in rates.
However, they will be keeping a close eye on Fed Chair Janet Yellen's comments
during a news conference for signals on how aggressive the Fed might be in
raising rates next year.
"The current expectation on the part of the Fed is they will raise interest
rates three times next year, but clearly one of the debates that's been ongoing
is what does the low level of inflation mean for the path going forward?"
INFLATION: New inflation data did nothing to alter expectations of another
Fed rate hike. The Labor Department said Wednesday that U.S. consumer prices
increased 0.4 percent last month as gasoline prices surged. Prices at the pump
increased a sharp 7.3 percent after falling in October. Excluding volatile food
and energy prices, so-called core consumer inflation rose a modest 0.1 percent
INDUSTRIALS GAIN: Industrials sector stocks accounted for much of the
market's gains. Caterpillar climbed $5, or 3.5 percent, to $148.37.
MENDING FENCES: Western Digital rose 2.3 percent after the hard drive maker
resolved a dispute with its partner Toshiba over Toshiba's plan to sell its
flash memory business. Western Digital climbed $1.85 to $83.62.
APPLE TAKES A BITE: Finisar jumped 29 percent after Apple said it will
invest $390 million in the fiber optic component supplier so it can make more
lasers used in facial recognition technology. Finisar increased $5.60 to
$24.90. Apple was up 86 cents, or 0.5 percent, to $172.56.
DELIVERY DEAL: Target rose 2 percent after the retailer said it plans to
boost its same-day delivery capability by paying $550 million for Shipt. The
delivery service company charges members $99 a year and sends people out to
choose and deliver groceries from stores. Target climbed $1.23 to $62.25.
ROSY OUTLOOK: Honeywell International rose 1.2 percent after the industrial
conglomerate raised its annual profit forecast and said fourth quarter sales
have been strong. The stock gained $1.92 to $155.66.
OUT THE DOOR: Diebold fell 4.1 percent after the ATM and security systems
maker said CEO Andreas Mattes has resigned. The stock gave up 75 cents to
FINANCIALS FLOUNDER: Banks and other financial stocks declined the most.
Charles Schwab slid 72 cents, or 1.4 percent, to $50.84.
ENERGY: Oil prices veered lower, giving up early gains. Benchmark U.S. crude
fell 31 cents to $56.83 per barrel on the New York Mercantile Exchange. Brent
crude, used to price international oils, slid 70 cents, or 1.1 percent, to
$62.64 per barrel in London.
The decline in oil prices weighed on several energy stocks. National Oilwell
Varco lost 50 cents, or 1.5 percent, to $32.64.
BOND YIELDS: Bond prices rose. The yield on the 10-year Treasury fell to
2.38 percent from 2.40 percent late Tuesday.
CURRENCIES: The dollar fell to 113.07 Japanese yen from 113.58 yen late
Tuesday. The euro strengthened to $1.1770 from $1.1737.
THE BITCOIN TRADE: Bitcoin futures fell $1,480, or 8 percent, to $16,540 on
the Cboe Futures Exchange. The futures allow investors to make bets on the
future price of bitcoin. The average price of an actual bitcoin was $16,070 in
trading on private exchanges, according to Coindesk. The price of the digital
currency has soared this year, having begun 2017 under $1,000.
MARKETS OVERSEAS: In Europe, Germany's DAX fell 0.4 percent, while France's
CAC-40 slid 0.5 percent. London's FTSE 100 shed 0.1 percent. Earlier in Asia,
Hong Kong's Hang Seng rose 1.5 percent, while Tokyo's Nikkei 225 shed 0.5
percent. Seoul's Kospi added 0.8 percent. Sydney's S&P-ASX 200 picked up 0.1
percent and India's Sensex added 0.4 percent.