The Dow added gains on Wednesday with the focus less on the Federal Reserve's widely anticipated 25 basis point hike to the benchmark interest rate and more on the projected outlook for 2018. Alongside that news was Congress' deal on tax legislation with the corporate tax rate set at 21%.
Markets were mixed as the S&P 500 slid -0.04% while the Dow was up +0.35% and NASDAQ benefitted from a tech bounce up +0.20%. The Fed rate increases were expected but what loomed in investors' minds was forecasts for 2018 and the Federal Reserve as expected kept that the same - three quarter point rate increases and two increases for both years 2019 and 2020. All good news for stocks as concerns about soft inflation means as Dennis DeBusschere, head of portfolio strategy at Evercore ISI was quoted in Bloomberg: "“This is a tailwind for equities as it implies that growth has improved while inflation remains weak making the FOMC unlikely to tighten too quickly,”
Gold jumped on the news of the quarter-point increase and 2018 outlook rising +1.27% to $1,257.6 per ounce. Markets would also have been cheered by the shape of taxes to come as Republicans rushed to push through the biggest tax reform in 30 years despite the continuing controversy over various elements. Full details of the bill are to be delivered later this week and final votes are expected next week in both the House and the Senate. The rush is to finish to have legislation before Christmas and, crucially, before the Democrat winner of Alabama Senate race Doug Jones takes his seat officially.
• Dow 24,589.98 +0.35%
• S&P 500 2,663.15 -0.04%
• NASDAQ 6,875.80 +0.20%
• Russell 2000 1,524.61 +0.56%
• NYSE Composite 12,714.43 +0.13%
• Gold 1,257.6 +1.27%
• Oil WTI $56.66 -0.48% (3:52PM EST)
• 10-Year Treasury 2.348 +0.52%
Among the day's best performers were Caterpillar rose +3.59% and NIKE added +3.43%. Techs saw gainers with Apple up +0.46%. Finisar, system provider for data communication and telecommunication applications sprinted up +22.8%.
Oil prices fell as crude oil stockpiles fell by 5.1 million barrels in the last week's data while gasoline inventories rose by 5.7 million barrels suggesting the drop in crude stocks are being put into storage according to the The Wall Street Journal.
Gene McGillian, research manager at Tradition Energy,was quoted saying, "There’s a concern that drops in crude stocks are being put into fuel [storage] tanks. That doesn’t make a real picture for strong demand.”