Market Wrap: Stocks Climb as Fed Puts Dec. Rate Hike in Play
NEW YORK -- U.S. stocks ended sharply higher Wednesday after a volatile session as the Federal Reserve gave a vote of confidence in the U.S. economy by signaling a December interest rate hike was still on the table.
S&P financials, which benefit from higher borrowing rates, shot up following the Fed statement and led sector gains. The financial index ended up 2.4 percent, its biggest percentage gain in seven weeks. The KBW Nasdaq regional bank index jumped 4.1 percent.
S&P utilities, which tend to do worse when interest rates are rising, fell 1.1 percent and led S&P sector declines.
The Fed left rates unchanged, as expected, and, in a direct reference to its next meeting, put a December rate hike firmly in play. It also downplayed global economic headwinds in its statement.
Stocks initially sold off following the statement, with the S&P 500 erasing close to a 1 percent gain, but quickly rebounded to end at the day's highs as investors saw the statement as a sign the Fed has confidence the U.S. economy can sustain a rate hike.
"Obviously the first move [in stocks] is down, which is conventional wisdom. However, I do like the idea of the Fed having more confidence in the economy, less concerned about the global backdrop and willing to ring the bell on the long-term health of the U.S. economy with a rate hike," said Michael Marrale, head of research, sales and trading at ITG in New York.
The Fed hasn't raised rates in nearly a decade.
The Dow Jones industrial average (^DJI) rose 198.09 points, or 1.1 percent, to 17,779.52, the Standard & Poor's 500 index (^GSPC) gained 24.46 points, or 1.2 percent, to 2,090.35, its highest in more than two months.
The Nasdaq composite (^IXIC) added 65.55 points, or 1.3 percent, to 5,095.69, while the Nasdaq 100 index of biggest non-financial names rose 0.9 percent to 4,678.57, just shy of a 15-year high.
Movers and Shakers
A 4.1 percent gain in Apple (AAPL) shares to $119.27 also helped support indexes a day after stronger-than-expected results.
The company sold 48 million iPhones in the latest quarter and posted a near doubling of revenue from China, allaying concerns about its business in the world's second-largest economy.
On the flip side, Twitter (TWTR) shares fell 1.5 percent to $30.87 while Akamai Technologies (AKAM) dropped 16.7 percent to $62.91, Both reported disappointing results late Tuesday.
The S&P energy sector snapped a three-day losing streak, ending up 2.2 percent, after a sharp rally in crude oil prices .
After the bell, shares of GoPro (GPRO) dropped 15.2 percent to $25.62 following its results.
Advancing issues outnumbered declining ones on the NYSE by 2,428 to 645, for a 3.76-to-1 ratio on the upside; on the Nasdaq, 2,252 issues rose and 605 fell for a 3.72-to-1 ratio favoring advancers.
The S&P 500 posted 35 new 52-week highs and six new lows; the Nasdaq recorded 155 new highs and 82 new lows.
About 8.5 billion shares changed hands on U.S. exchanges, well above the 7.1 billion daily average for the past 20 trading days, according to Thomson Reuters (TRI) data.
-Chuck Mikolajczak contributed reporting.
What to watch Thursday:
- At 8:30 a.m. Eastern time, the Labor Department releases weekly jobless claims, and the Commerce Department releases third-quarter gross domestic product.
- At 10 a.m., Freddie Mac releases weekly mortgage rates, and the National Association of Realtors releases pending home sales index for September.
These selected companies are scheduled to report quarterly financial results:
- Aetna (AET)
- Altria Group (MO)
- ConocoPhillips (COP)
- Goodyear Tire & Rubber Co. (GT)
- Johnson Controls (JCI)
- LinkedIn (LNKD)
- MasterCard (MA)
- Starbucks (SBUX)
- Teva Pharmaceutical (TEVA)
- Time Warner Cable (TWC)