By ALEX VEIGA
Associated Press 

US stocks indexes close mostly higher after Fed rate hike

The major U.S. stock indexes finished mostly higher Wednesday, with small companies notching big gains as lawmakers in the House and Senate reached a deal on a sweeping tax reform package.

 

December 14, 2017



The major U.S. stock indexes finished mostly higher Wednesday, with small companies notching big gains as lawmakers in the House and Senate reached a deal on a sweeping tax reform package.

The Dow Jones industrial average eked out its third record-high close in as many days, driven by a jump in Caterpillar. But a last-minute pullback in bank stocks left the Standard & Poor’s 500 index slightly lower.

Packaged food and beverage stocks, health care companies and industrials shares accounted for much of the market’s modest gains. Banks struggled as long-term bond yields edged lower, which makes it tougher for banks to earn money from lending.

The decline in financial stocks came even as the Federal Reserve raised its benchmark rate for the third time this year. The move, which was widely expected, came as the central bank noted that the U.S. economy was on sound footing.

“Widely expected. No big surprises. No big changes,” said Tim Dreiling, regional investment director at U.S. Bank Wealth Management. “It’s encouraging that they continue to see economic growth continuing into 2018, which aligns with our thinking.”

The S&P 500 index slipped 1.26 points, or 0.1 percent, to 2,662.85. The index closed at all-time highs on Monday and Tuesday.

The Dow gained 80.63 points, or 0.3 percent, to 24,585.43. The Nasdaq added 13.48 points, or 0.2 percent, to 6,875.80. The Russell 2000 index of smaller-company stocks picked up 8.33 points, or 0.6 percent, to 1,524.45.

Bond prices rose. The yield on the 10-year Treasury fell to 2.34 percent from 2.40 percent late Tuesday.

Trading got off to a subdued start Wednesday as investors waited for the afternoon policy update from the Fed.

As expected, the central bank raised the federal funds rate — what banks charge each other for short-term loans — by 0.25 percentage points to a still-low range of 1.25 to 1.5 percent. The latest short-term rate increase is the third one implemented by the Fed this year and signals the central bank’s confidence that the U.S. economy remains on solid footing 8½ years after the end of the Great Recession.

Oil prices veered lower, giving up early gains. Benchmark U.S. crude fell 54 cents to settle at $56.60 per barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, slid 90 cents, or 1.4 percent, to close at $62.44 per barrel in London.

The dollar fell to 112.52 Japanese yen from 113.58 yen late Tuesday. The euro strengthened to $1.1820 from $1.1737.

Bitcoin futures fell on their third day of trading, dropping $965, or 5.4 percent, to $17,055 on the Cboe Futures Exchange. The futures allow investors to make bets on the future price of bitcoin. The average price of an actual bitcoin was $16,654 in trading on private exchanges, according to Coindesk. The price of the digital currency has soared this year, having begun 2017 under $1,000.

In other energy futures trading, wholesale gasoline fell 5 cents, or 3 percent, to $1.65 a gallon. Heating oil shed 3 cents to $1.90 a gallon. Natural gas rose 4 cents, or 1.4 percent, to $2.72 per 1,000 cubic feet.

Gold rose $6.90 to $1,248.60 an ounce. Silver gained 20 cents to $15.87 an ounce. Copper added 3 cents to $3.05 a pound.

Major stock indexes in Europe also closed lower Wednesday. Germany’s DAX fell 0.4 percent, while France’s CAC-40 slid 0.5 percent. London’s FTSE 100 shed 0.1 percent.

Earlier in Asia, Hong Kong’s Hang Seng rose 1.5 percent, while Tokyo’s Nikkei 225 shed 0.5 percent. Seoul’s Kospi added 0.8 percent. Sydney’s S&P-ASX 200 picked up 0.1 percent and India’s Sensex added 0.4 percent.

 
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