Modest Strength On Wall Street Lifts Dow To Record Close - U.S. Commentary

(RTTNews) - Stocks turned in a relatively lackluster performance throughout the trading day on Wednesday even as the Federal Reserve announced its latest policy decision. The major averages eventually ended the day modestly higher, with the Dow reaching a new record closing high.

The Dow ended the session up 45.47 points or 0.3 percent at 16,580.84, topping the previous record closing high set on the final trading day of last year. The Nasdaq also rose 11.01 points or 0.3 percent to 4,114.56, while the S&P 500 climbed 5.62 points or 0.3 percent to 1,883.95.

The modestly higher close on Wall Street came following the Fed's widely anticipated decision to scale back its asset purchase program by another $10 billion.

The Fed reduced the pace of its asset purchases to $45 billion a month and suggested that it is likely to continue tapering the program in measured steps at future meetings.

At the same time, the central bank reiterated that it is likely to keep interest rates at near-zero levels for a considerable time after the asset purchase program ends.

Most of the statement was identical to the one released following the March meeting, although the Fed noted that growth in economic activity has picked up recently after having slowed sharply in the winter due to adverse weather conditions.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "The Fed understands the risks involved with a removal of accommodation and I believe in their eyes, boring is good right now."

"How long the market views boring [as good will soon be seen, however,] as we will now cross the threshold of being half way done with QE at the next meeting," he added.

On the economic front, the Commerce Department released a report before the start of trading showing only a modest uptick in U.S. economic activity in the first three months of the year.

The report said GDP inched up by just 0.1 percent in the first quarter of 2014 compared to the 2.6 percent growth seen in the fourth quarter of 2013.

While the severe winter weather had been expected to contribute to a notable slowdown in the pace of GDP growth, economists had still been calling for an increase of about 1.2 percent.

Meanwhile, payroll processor ADP released a separate report showing stronger than expected private sector job growth in the month of April.

ADP said private sector employment surged up by 220,000 jobs in April compared to economist estimates for an increase of about 210,000 jobs.

Sector News

Despite the upward move shown by the broader markets, most of the major sectors ended the day showing only modest moves.

Significant strength was visible among trucking stocks, however, with the Dow Jones Trucking Index jumped 2.6 percent to a three-month closing high.

C.H. Robinson (CHRW) helped lead the trucking sector higher, surging up by 5.1 percent after reporting better than expected first quarter earnings.

Brokerage, telecom, and biotech stocks also saw strength on the day, while some weakness was visible among computer hardware stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index edged up by 0.1 percent, while Hong Kong's Hang Seng Index tumbled by 1.4 percent.

The major European markets also ended the day on opposite sides of the unchanged line. While the French CAC 40 Index dipped by 0.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index both crept up by 0.2 percent.

In the bond market, treasuries saw further upside following the Fed's monetary policy announcement, closing firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.7 basis points to 2.648 percent.

Looking Ahead

Trading on Thursday may be impacted by the release of a slew of U.S. economic data, including reports on weekly jobless claims, personal income and spending, and national manufacturing activity.

However, reaction to the data may be somewhat subdued as traders look ahead to the release of the more closely watched monthly jobs report on Friday.

On the earnings front, Exxon Mobil (XOM), ConocoPhillips (COP), Kellogg (K), and MasterCard (MA) are among the companies due to report their quarterly results before start of trading on Thursday.