Stock Market News For Dec 14, 2017
Zacks Investment Research | Dec 13, 2017 10:25PM ET
The Fed hiked its benchmark rates on Wednesday, as was widely expected, helping most benchmarks finished in the green. Even though the Dow notched up a record close, the S&P 500 closed in the red after financials tanked. Meanwhile, Democrat Doug Jones won elections in Alabama, disturbing the Republican majority in the Senate.
The Dow Jones Industrial Average (DJIA) increased 0.3%, to close at 24,585.43. The S&P 500 Index (INX) declined 0.05% to close at 2,662.85. The tech-laden Nasdaq Composite Index (IXIC) closed at 6,875.8, gaining 0.2%. Advancers outnumbered decliners on the NYSE by a 1.31-to-1 ratio. On Nasdaq, a 1.83-to-1 ratio favored advancing issues. The CBOE VIX increased 0.1% to close at 9.9.
Fed Hikes the Benchmark Interest Rate
The Federal Reserve finally increased its benchmark interest rate on Wednesday by a quarter percentage point. The new rate of interest will hover between 1.25% and 1.5%. This marks the fourth rate hike by Fed in a year’s time. Further, central bank officials reiterated their earlier projection of three possible rate hikes in 2018. Central bankers reasoned that a hike in interest rate would actually prevent the economy from overheating and negate the effects of a sudden increase in inflation.
Also, the central bank did not alter its initial forecast for inflation. The Fed projects a gradual increase in inflation with officials forecasting that the year will end with inflation levels still below 2%. This also marked Janet Yellen’s last news conference as the Fed Chief before her term ends in February next year.
Doug Jones’ Win Upsets Republican Advantage on Tax Bill
Democrat candidate Doug Jones won the Senate elections in Alabama late on Tuesday. defeating Republican Roy Moore. His victroy actually upset the Republican majority in the Senate, required to push through the Tax Bill. Earlier in the month, U.S. Senate Republicans approved the much awaited tax Bill to be passed in the Senate. These developments weighed on investor sentiment.
How Did the Benchmarks Perform?
The Dow advanced 80.6 points on Wednesday to post its fifth straight day of gains and notching up a record close in the process. Such gains were buoyed by an increase in shares of Caterpillar (NYSE:CAT) , which surged 3.6% in intraday trade. Moreover, Fed’s decision to hike the interest rate also boosted gains for the Dow.
The S&P 500 decreased 1.26 point to end in the negative territory, ending its four–day streak of gains. Of the 11 major segments of the S&P 500, four ended in the positive territory, with financials leading the decliners. The Financial Select Sector SPDR ETF (NYSE:XLF) declined 1.2% and weighed on the S&P 500. Financial stocks such as Bank of America (NYSE:BAC) , JP Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) all declined 1.6%, 1.3% and 1.5%, respectively and led the S&P 500 lower. You can see Zacks Investment Research
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