Dow Hits Triple-Digit Close, Nears 20,000

Advertisement

U.S. equities continued their upward march on Tuesday as the Federal Reserve kicked off its two-day policy meeting. Another rate hike is expected to be announced on Wednesday, the second of this tightening cycle and the first move since the Federal Reserve lifted rates last December for the first time since 2006.

Yet the bulls didn’t seem to mind, piling into one-time momentum favorites in the tech sector in what could be labeled a textbook melt-up scenario. These are stocks that have lagged the broad market post-election ramp up but are now, on account of their large capitalizations, helping the major averages to vertical as the Dow Jones Industrial Average closes in on the 20,000 threshold.

In the end, the Dow Jones gained 0.6%, the S&P 500 Index gained 0.7%, the Nasdaq Composite added 1% and the Russell 2000 gained a fraction. Treasury bonds were mixed, the dollar was little changed, gold lost 0.6% and oil gained for the fourth consecutive day with a rise of 0.3%.

Energy stocks led the way with a 1.3% gain helped not only by oil’s rise and the lingering effect of the OPEC/non-OPEC supply freeze agreements hammered out earlier this month but by a number of pro-oil cabinet picks by President-elect Donald Trump.

121316-xomExxon Mobil Corporation (NYSE:XOM) CEO Rex Tillerson has been nominated to be the next Secretary of State with Trump praising his “tenacity, broad experience and deep understanding of geopolitics” and connections with leaders around the world. Former Texas Governor Rick Perry was reportedly asked to head the Energy Department.

XOM shares surged 1.8% in response to further lift out of a multi-month consolidation range. That resulted in huge gains for the call options recommended to subscribers, with Edge Pro clients seeing a 253% gain in their Dec $88 XOM calls and a 210% gain in their Dec $87.50 XOM calls.

Technology stocks gained 1.2% as a group with familiar names on the move. Facebook Inc (NASDAQ:FB) gained 2.2%. Intel Corporation (NASDAQ:INTC) gained 2.3%. And Apple Inc. (NASDAQ:AAPL) gained 1.7%. Materials and industrial stocks lagged after recent outperformance.

Looking ahead, the docket is full on Wednesday with not only the Fed’s policy decision and updated economic projections but the release of fresh numbers on inflation, retail sales and industrial production.

For now, investors remain optimistic: According to the latest Bank of America Merrill Lynch fund manager survey, 54% of respondents believe the rotation into cyclical and inflationary sectors of the market will continue into 2017. This is up from 44% last month.

Expectations for global growth jumped to 19-month highs while global inflation expectations hit their second-highest level in over 12 years. Corporate profit expectations are at their most optimistic level in more than six years, with 56% thinking profits are set to grow over the next year.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/12/stock-market-today-nyse-dow-jones-industrial-average-investing-news-20000-2/.

©2024 InvestorPlace Media, LLC