Closing Update: Promises of 'Gradual, Prudent' Pace of Future Interest Rate Increases Sends U.S. Markets On Tear

Stocks extended their gains Wednesday, jumping to session highs soon after the Federal Reserve - as expected - today raised U.S. interest rates for the first time in nearly a decade. Investors were buoyed by dovish comments this afternoon by Fed Chair Janet Yellen following the quarter-point rate increase, suggesting future rate moves will arrive in a "gradual and prudent manner."

Stocks briefly turned negative shortly after the long-awaited rate decision only to return to previous levels within a few minutes of the 2 p.m. ET Federal Open Markets Committee announcement and rapidly gain steam as the Fed chair explained why the central bank decided now was the time to end its zero interest rate policy that's been in place since 2008.

Although the overall American economy was "expanding at a moderate rate" and the labor market showing more signs of improvement, Yellen said, "there remains slack in the economy," noting that, in particular, a still slow labor participation rate and persistently high levels of part time employment. Inflation also remains under the Fed's 2% target rate, she said, with the pace of future rate decisions relying on "actual progress toward our inflation goal."

Stocks drifted with small gains prior to the FOMC announcement, with steep declines for energy stocks keeping the broader market gauges within close distance of their break-even marks. The energy sector declines followed the governments weekly inventory report that found a surprise rise in commercial supplies over prior-week levels of 4.8 million barrels during the seven days ended Dec. 11 compared with expert opinion looking for a 2.5 million barrel decline, sending crude oil prices in another steep skid. Energy stocks were the only sector in the S&P 500 to finish lower Wednesday, although it too pared its earlier decline to finish back near its break-even mark by today's close.

Crude oil for January delivery settled $1.83 lower at $35.52 per barrel, while January natural gas futures fell 3 cents to $1.79 per 1 million BTU. February gold climbed $15.20 to $1,076.80 per ounce while March copper added 2 cents to reach $2.06 per pound.

Here's where the U.S. markets stood at the end-of-day:

Dow Jones Industrial Average up 224.18 (+1.28%) to 17,749.09

S&P 500 up 29.66 (+1.45%) to 2,073.07

Nasdaq Composite Index up 75.77 (+1.52%) to 5,071.13


Hang Seng Index up 2.01%

Shanghai China Composite Index up 0.17%


(+) ACST, Discloses plans to begin a bridge study of its CaPre drug candidate to treat cardiometabolic disorders following "encouraging" discussions with U.S. Food and Drug Administration.

(+) JRJC, Reports Q3 net income of $9.7 mln, or $0.39 per ADS, reversing a $2.4 mln and $0.11 per ADS loss last year. Revenue rises 74.8% over last year to $37 mln. No analyst estimates available for comparison.

(+) FXCM, CEO Dror Niv buys 20,000 shares of the company stock at $6.48 apiece, spending nearly $129,600 in his first purchase of FXCM stock. CFO Robert Lande and board member Ryan Silverman also buy a combined 31,000 shares, according to regulatory filings.


(-) LAKE, Q3 revenue climbs 6.0% over year-ago levels to $24.9 mln but still trails the $25.52 mln estimate of the only analyst now following LAKE. Earns $0.29 per share, topping the analyst's call by $0.03 per share.

(-) RPXC, Acquires Inventus Solutions, paying $232 million in cash for the legal services firm, which is expected to increase yearly revenue by $50 mln to $60 mln. Also pays more than $100 mln for licensing rights to patent portfolio owned by Round Rock Research.

(-) CRC, Expects 1% increase in 2015 production over prior-year levels, including a 5% rise in average crude oil production to 104,000 barrels per day. Completes bond exchange reducing principal amount by $563 mln while increasing interest costs by only $21 mln.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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