Stocks Close Notably Higher Following Fed Minutes - U.S. Commentary

(RTTNews) - Stocks moved notably higher during trading on Wednesday, adding to the gains posted on the first trading day of the new year. With the upward move, the S&P 500 ended the day just shy of its record closing high.

The major averages moved roughly sideways going into the close, hovering near their best levels of the day. The Dow rose 60.40 points or 0.3 percent to 19,942.16, the Nasdaq jumped 47.92 points or 0.9 percent to 5,477.00 and the S&P 500 advanced 12.92 points or 0.8 percent to 2,270.75.

The markets continued to benefit from optimism about the outlook for the economy in 2017 following the recent release of upbeat data from around the globe.

The rally seen in reaction to President-elect Donald Trump's surprise victory helped to lift the major averages to record highs, although the Dow has encountered some resistance around the 20,000 level.

Traders may be reluctant to push the blue chip index above the key psychological level ahead of the release of the closely watched monthly jobs report on Friday.

Stocks saw continued strength following the release of the minutes of the Federal Reserve's latest monetary policy meeting.

The minutes indicated that the Fed's decision to raise interest rates by a quarter point was partly due to an assumption of more expansionary fiscal policy under President-elect Donald Trump.

While participants viewed a gradual approach to policy firming as likely to be appropriate, they pointed to a number or risks that might call for a different path of policy than they currently expected.

The Fed said many participants judged that rates might need to be raised more quickly than currently anticipated due to the risk of a drop in the unemployment rate leading to a buildup of inflationary pressures.

"However, with inflation still below the Committee's 2 percent objective, it was noted that downside risks to inflation remained and that a moderate undershooting of the longer-run normal unemployment rate could help return inflation to 2 percent," the minutes said.

Sector News

Biotechnology stocks turned in some of the market's best performances on the day, driving the NYSE Arca Biotechnology Index up by 3.8 percent. With the jump, index reached its best closing level in a month.

Within the biotech sector, Orexigen Therapeutics (OREX) posted a standout gain, spiking by 64.3 percent to a three-month closing high.

Substantial strength was also visible among brokerage stocks, as reflected by the 2.7 percent advance by the NYSE Arca Broker/Dealer Index. Interactive Brokers (IBKR) and Raymond Jefferies (RJF) led the sector higher.

Housing stocks also saw considerable strength on the day, resulting in a 1.9 percent gain by the Philadelphia Housing Sector Index.

Airline, steel, railroad, and commercial real estate stocks also moved notably higher, reflecting broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index surged up by 2.5 percent, while China's Shanghai Composite Index advanced by 0.7 percent.

Meanwhile, the major European markets ended the day roughly flat. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the French CAC 40 Index and the German DAX Index finished the session near the unchanged line.

In the bond market, treasuries closed nearly unchanged for the second consecutive session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.452 percent.

Looking Ahead

Reports on weekly jobless claims, private sector employment, and service sector activity are likely to attract some attention on Thursday

Nonetheless, trading activity may be somewhat subdued ahead of the release of the closely watched monthly jobs report on Friday.