The S&P 500 and Dow Jones Industrial Average scored their best one-day gains of 2014
US stocks registered big gains on Wednesday, 17 December 2014. The S&P 500 and Dow Jones Industrial Average scored their best one-day gains of 2014 on Wednesday, shrugging off falling-oil worries and global deflationary concerns, after the Federal Reserve conveyed a more dovish posture at the conclusion of its two-day meeting.
The Dow Jones Industrial Average had jumped 300 points, shortly after the statement, though pared back during Yellen's comments only to close near session highs. The blue-chip index gained 288 points, or 1.7%, to 17,356.87. The S&P 500 closed 40.15 points, or 2%, higher at 2,012.89, gyrating back and forth while the Fed chairwoman Janet Yellen was speaking during a press conference to discuss the Fed's views. The Nasdaq Composite also rose sharply, led by big gains in the technology names.
All 10 main sectors closed with solid gains. The energy sector jumped by 4.2%, as oil prices reversed earlier losses.
As expected by some, the Fed removed the "considerable time" language from its policy statement, but that reference was replaced with a call for "patience," which essentially conveyed the same message. Above all, Chair Yellen reiterated that the central bank will remain data-dependent and reserves the right to accelerate, or defer, a rate hike in accordance with what the data are communicating about the progress being made toward the Fed's dual mandate. With regard to inflation, Ms. Yellen touched on the drop in oil prices during her press conference, but showed little concern, saying the decline is expected to be transitory.
The dollar inched up against most major rivals. Commodities such as gold that trade in dollar terms often are hurt by a stronger greenback.
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Stocks were already solidly higher ahead of the meeting, as currency and commodity markets calmed following two sessions fo wild swings. However, indexes soared after the Federal Open Market Committee's statement modified its considerable time language saying it can be patient about the timing of the first rate hike.
Chevron and Exxon Mobil were among the top gainers, rising 4.3% and 3% respectively. Apple gained 2.5%. Bank of America and JPMorgan Chase posted respective gains of 3.2% and 2.3%.
During the press conference, Fed chairwoman Janet Yellen sounded upbeat on the economy but noted that there was room for improvement. She stated that inflation is running below the Fed's 2% target inflation rate but expects to see normalization. She also suggested that the recent slump in oil may be fleeting, referring to crude oil price moves as possibly transitory.
The Federal Reserve included language in its policy statement that indicated that central bank is prepared to hike interest rates as early as the middle of next year, but will be patient as it forges a path toward monetary tightening.
The Fed modified the considerable time language in its statement and replaced it with new language that the U.S. central bank can be patient in beginning to tighten monetary policy.
Precious metals ended little higher at Comex on Wednesday, 17 December 2014 at Comex. Gold futures switched between small gains and losses on Wednesday in electronic trading, after briefly jumping above the key round number of $1,200 in the wake of what some more-dovish-than-anticipated Federal Reserve statement.
Gold for February delivery was last down $2.70, or 0.2%, to $1,191.60 an ounce. Before the Fed release hit at 2 p.m. Eastern, February gold had settled slightly higher but under $1,200 up 20 cents to $1,194.50 an ounce, snapping a five-day losing streak. March silver jumped 18 cents, or 1.1%, to settle at $15.93 an ounce.
U.S. crude-oil futures bounced back on Wednesday, 17 December 2014 rebounding from a five-year low after data showed crude inventories declined, although less than forecast.
Crude futures for delivery in January settled higher by 54 cents, or 1%, at $56.47 a barrel on the New York Mercantile Exchange. Oil had traded as low as $54.21 in earlier action, its lowest level since May 2009, then jumped by as much as 5% to nearly $59 before giving back most of that gain.
In the latest weekly inventory report, the U.S. Energy Information Administration reported a smaller-than-expected decline in U.S. crude supplies in the week ended 12 December 2014. Crude inventories declined by 800,000 barrels in the week while traders had expected a decline of 2.5 million barrels.
Today's participation was ahead of average with more than a billion shares changing hands at the NYSE floor.
Tomorrow, weekly Initial Claims (consensus 292K) will be released at 8:30 ET while November Leading Indicators (consensus 0.5%) and the Philadelphia Fed Survey for December (consensus 26.0) will cross the wires at 10:00 ET.
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