Benchmarks incurred modest gains on Wednesday after the Fed chose not to hike interest rate this month. Moreover, the Fed offered a positive view about the U.S. economy and said that it has been improving at a 'solid rate.' Such comments boosted gains for the broader markets. Meanwhile, investors eagerly waited for President Trump to announce the name of the next Fed Chief.
The Dow Jones Industrial Average (DJIA) closed at 23,435, gaining 0.3%. The S&P 500 Index (INX) increased 0.2% to close at 2,579. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,716.5, increasing 0.2%. A total of 6.9 billion shares were traded on Wednesday, higher than the last 20-session average of 6.2 billion shares. Advancing issues outnumbered decliners on the NYSE by a 1.09-to-1 ratio. On the Nasdaq, decliners outnumbered advancers by a 1.69-to-1 ratio. The CBOE VIX increased 1.3% to close at 10.31.
Healthy Economy and No Rate Hike Boosts Markets
Markets gained traction on Wednesday after the Fed decided not to raise the benchmark interest rates and offered a positive view about the U.S. economy. At the end of its two day meet, the Fed stated that the U.S. economy has been growing at a 'solid rate' compared to a 'moderate rate' in September.
Although, the Fed kept the interest rate unchanged in the range of 1% to 1.25%, it indicated that there is a huge possibility of a hike in rate in December. The CME FedWatch tool estimated that there is a 95% chance of a rate hike in December.
Meanwhile, a minority of policymakers maintained that the rate hike should be kept on hold till the inflation target of 2% is met. The core inflation, which the Fed stated is still 'soft'. It came in at 1.3% in September, falling from 1.4% in July and remaining well below the targeted rate. Moreover, the GDPNow tool of the Atlanta Fed's, estimated that the U.S. economy is slated for a 4.5% growth in the last quarter of 2017.
Such encouraging statements from the Fed boosted the investor sentiment and brought about broad based gains for the market. Meanwhile, investors are now eagerly waiting for President to announce the next Chief of Fed. A White House official stated on Monday that Trump would announce his decision on Thursday. Analysts widely expect him to choose Jerome Powell - Member of Federal Reserve Board of Governors - for the top post.
Benchmarks Make Modest Gains
The S&P 500 advanced 4 points on Wednesday to end the day in the positive territory. Earlier in the session, the index had hit an intraday record of 2,588.40. Of the 11 major sectors of the S&P 500, eight ended in the green, with energy stocks leading the advancers. The Energy Select Sector SPDR ETF (XLE) gained 1.2% to close at 68.69.
Moreover, shares of Estee Lauder EL , which gained 9.2% and also boosted the S&P 500. The company posted adjusted earnings per share of $1.21, beating the Zacks Consensus Estimate of 98 cents. Adjusted earnings surged 42.4% year over year. Excluding currency impact, adjusted earnings were $1.19. Strong top-line results combined with positive impacts of acquisitions benefited the company's first-quarter fiscal 2018 results. Estee Lauder's net sales of $3,274 million surpassed the Zacks Consensus Estimate of $3,164 million. ( Read More )
The company possesses a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Meanwhile, the Dow amassed 58 points to end in the green. The blue-chip index also hit an intraday record of 23,517.71, but ended lower.
The ISM Manufacturing Index came in at 58.7 in October, down from 59.8 in September. The consensus for the period was 59.4. Such a fall in the manufacturing activity in the United States can be attributed to disruptions in the supply chain and increase in prices of raw materials.
Meanwhile, construction spending increased 0.3% to $1.22 trillion in September, up from 0.1% in August. The consensus estimated the figure to decline 0.1% for the period. Economists commented that this can be attributed to an increase in public construction outlays which also negated a decline in investment in private projects. Further, crude inventories declined by 2.4 million barrels from last week.
Stocks That Made Headlines
Zacks' Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report