Stocks Close Higher On Positive Reaction To Fed Statement - U.S. Commentary

(RTTNews) - With traders reacting positively to the Federal Reserve's monetary policy announcement, stocks managed to end Wednesday's trading notably higher. The upward move on the day extended the strong rebound seen in the previous session.

The major averages remained firmly positive going into the close but ended the day off their highs for the session. The Dow climbed 121.12 points or 0.7 percent to 17,751.39, the Nasdaq rose 22.53 points or 0.4 percent to 5,111.73 and the S&P 500 advanced 15.32 points or 0.7 percent to 2,108.57.

After seeing early strength on a rally by Chinese stocks and some upbeat earnings news, stocks continued to perform well following the announced from the Fed.

As was widely expected, the central bank left interest rates unchanged, and its accompanying statement was little changed from the statement released following the June meeting

The statement included some subtle changes that point toward a near-term interest rate hike, but the Fed did not provide a specific timetable.

The Fed reiterated economic activity has been expanding moderately and was somewhat more upbeat about the labor market and the housing sector.

Analysts also highlighted the inclusion of the word "some" in the Fed's assessment that it would be appropriate to raise rates "when it has seen some further improvement in the labor market."

The comment is likely to increase the focus on the two monthly jobs reports scheduled to be released before the next Fed meeting in September, with the July jobs report due out next Friday.

Chris Low, chief economist at FTN Financial, said, "The message of 'some' is that the past 6 weeks data pushed the FOMC a little closer to raising rates, but they are still waiting for more good news before they actually pull the trigger."

In light of the focus on the Fed, traders largely shrugged off a report from the National Association of Realtors showing an unexpected drop in pending home sales in June.

Sector News

While most of the major sectors moved higher on the day, trucking stocks turned in a particularly strong performance. .The Dow Jones Trucking Index surged up by 3.4 percent, reaching its best closing level in three months.

YRC Worldwide (YRCW) helped to lead the trucking sector higher, jumping 15.1 percent to a three-month closing high.

Steel stocks also moved sharply higher on the day, driving the NYSE Arca Steel Index up by 2.8 percent. With the gain, the index continued to recover from the six-year closing low set on Monday.

Considerable strength was also visible among gold stocks, as reflected by the 2.5 percent gain posted by the NYSE Arca Gold Bugs Index. The strength in the sector came despite a decrease by the price of gold.

Energy, railroad, brokerage, and housing stocks also saw significant strength on the day, while some biotechnology stocks bucked the uptrend.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved higher along with Chinese stocks. Hong Kong's Hang Seng Index rose 0.5 percent, and Australia's All Ordinaries Index advanced 0.7 percent. However, Japan's Nikkei 225 Index bucked the uptrend and edged down 0.1 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index surged up by 1.2 percent, the French CAC 40 Index climbed by 0.8 percent and the German DAX Index rose by 0.3 percent.

In the bond market, treasuries finished the day in the red, extending the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.9 basis points to 2.279 percent.

Looking Ahead

Trading on Thursday may continue to be impacted by reaction to the Fed statement, although traders are also likely to keep an eye on reports on second quarter GDP and weekly jobless claims.

On the earnings front, Facebook (FB), MetLife (MET), and Whole Foods (WFM) are among the companies releasing their quarterly results after the close of today's trading.

Procter & Gamble (PG), Sony (SNE), Time Warner Cable (TWC), Cigna (CI), Colgate-Palmolive (CL), and Nokia (NOK) are also due to report their results before the start of trading on Thursday.