The Fed Hiked a Quarter Percent: Now What?

Interest Rates

So here we have it – the first rate hike in nearly a decade.

The Fed hiked rates a quarter point on the federal funds rate in a unanimous vote. This is the overnight rate member banks get when they need to borrow to meet reserve requirements. Dropping that little pebble in the pond ripples across the U.S. Treasury curve and really all other interest rates.

Since the market was expecting this increase, Treasury bonds, notes and bills had already priced it in, so there wasn’t much of a move after the announcement.

The statement

said any future increases will be gradual, and you know what that means: don’t look for another hike anytime soon. The stock market moved sharply higher on that news.

What is a bit interesting is that the Fed adjusted their projections for inflation down and don’t expect to hit their 2% target until 2018.

They’re confused why inflation hasn’t picked up more with their easy monetary policy over the last seven years, either because they don’t see the deflationary forces we do, or they know they can’t admit to them. So Fed Chair Janet Yellen says it’s been pulled lower by temporary influences like lower energy prices.

But before we go forward, I want to give you a little background about the Fed and why this particular meeting was so crucial, besides obvious reasons.

The Fed schedules eight Federal Open Market Committee (FOMC) meetings per year.

In them, they review economic and financial conditions…

Determine the appropriate stance of monetary (interest rate) policy…

And reassess the risks to their long-term goals of price stability (inflation) and sustainable economic growth.

The FOMC consists of twelve voting members. Seven members are the Board of Governors of the Federal Reserve, plus the president of the Federal Reserve Bank of New York. The other four are rotating seats with a one-year term, who are presidents from other regional banks.

Every other FOMC meeting, the Fed Chair gives a press conference and the Fed releases updated projections.

Today’s meeting was one of those occasions.

The projections are for short, medium and long-term periods for GDP growth, unemployment rates, and the price index for personal consumption (PCE) inflation, as well as projected federal funds rates.

It’s after these press conference meetings, like today’s, where there’s more chance of surprise.

The statement itself usually leaves little to misinterpret. But sometimes financial reporters will squeeze some information from the Fed chair that wasn’t meant to be said – which can sometimes point to future policy decisions.

Any insight there can move the markets. However, the current chair, Janet Yellen, is good about keeping her opinions to herself and just talks in generalities about what they have decided as a group. She never lets on as to whether there was some disagreement among the voting members.

So when a reporter asked if the Fed simply raised rates to sustain their credibility, Yellen kept her ground. And when another asked about the possibility of another recession, she responded with hypotheticals and vague generalities.

Going into today’s decision, the Fed was widely expected to raise rates. Keep in mind, though, there was a massive amount of positioning ahead of the meeting. Investors are not only positioning for what they expected at this meeting but for future meetings.

Of course, Yellen didn’t give any clue as to when to expect a future hike, which creates a lot of uncertainty among those betting investors, and will magnify volatility going forward. That’s especially the case if global headwinds heat up, or if future economic reports show a cooling economy.

The Fed Hikes Rates – What Next?

Federal Reserve

As expected, the Federal Reserve hiked interest rates this week, and there’s obvious nervousness out there regarding the impact this will have, if any.

In his recent Big Picture podcast, Jim Puplava, Founder of Financial Sense and Chief Investment Strategist at PFS Group, said the Fed should hike once and stay quiet, in reference to the highly active “Open Mouth Committee,” as he calls it.

In terms of risks to the market, Puplava cites two: one is procedural and the other coming from China.

“Can they really get this right? We have a saying here that they keep raising until something breaks. Number two is China’s devaluation…because China pegs its currency to the dollar, and the dollar has risen 20 percent against other major currencies.”

As the Fed tightens, ostensibly making the dollar more attractive, the Chinese Yuan will come under increasing pressure, he noted. This means China is more likely to devalue, which could cause further disruption, as we saw earlier this year (see our recent interview with Felix Zulauf).

Another aspect of the global economy that’s playing into concerns are energy prices, with companies in the United States cutting back on drilling, and with rig counts also falling.

These companies are responding to market pressures by cutting production and reducing supply, Puplava noted, and interestingly OPEC is unlikely to cut back on production in this scenario. OPEC countries are more dependent on oil revenue to pay government expenses, he said, and if they were to cut back on production, the response in the West would be to increase production.

“I think … OPEC has figured that out, so right now OPEC producers from Saudi Arabia on down are scrambling to maintain market share,” Puplava said. “In a world of oversupply and reduced demand, the tendency is for prices to remain weak.”

However, we’re beginning to see signs typical of a bottoming process, he added, where companies pull back on investment. This is typical of what we see in the final phases of a bear market, and it’s a bottoming process of the cycle, he said.

In addition to layoffs in the energy sector amounting to hundreds of thousands of jobs and declining production, companies are struggling to remain solvent. And this is spilling into the mining industry as well, Puplava noted, highlighting Anglo America’s plan to cut 85,000 jobs from its work force, sell major assets and suspend its dividend to remain solvent.

Ultimately, the company that will emerge will be more cost efficient, leaner and focusing on profitability, he noted. Other miners are taking similar, though perhaps less drastic measures and many are focusing on high-grade ore deposits to maximize production value.

“The result is what we are seeing now, where the inefficient companies go under,” he said. “Expect to see more of that next year, or they’re taken over by the big guys, the big guys deleverage and divest in order to survive, and the result is you’ll see supply contract to the point that it becomes less than the demand, setting up the stage for the next bull market.”

There are a lot of aspects in play, Puplava stated, and many companies are still producing oil and miners are still mining to keep their operations going and service debt. Many producers hedged their production, but that is coming off in 2016, Puplava noted. What needs to happen is supply needs to contract dramatically, and not just gradually, for the bottoming process to play out, he said.

“At some point, we’re going to see a balance,” he said. “I like the blue chip energy stocks. Most of the companies are cutting back on (capital expenditures).”

Even though energy companies’ earnings are down about 70 percent over a year ago when the price of oil was over $100 a barrel, so far the expense cuts in CAPEX expenditures have allowed these companies to cover their dividends, Puplava said.

“If (oil) prices stay down at $30 for another year or two, the big guys would have to think seriously about maintaining their dividends,” he added. “This is what you see in a bear market. It’s that washout … (we’ve seen these) Maalox Moments, and you want to see that.

You want to see an acceleration of this and you want to see it pick up pace.”

ONGC, 9 Other Sensex Firms Add Rs 28,382 Crore to Market Value

ONGC, 9 Other Sensex Firms Add Rs 28,382 Crore to Market ValueNew Delhi: The combined market valuation of top ten Sensex companies rose by Rs 28,382.58 crore during the week from December 21 to December 24, with (Oil & Natural Gas Corporation (ONGC) emerging as the biggest gainer.

The market capitalisation (M-Cap) of ONGC surged by Rs 9,154.37 crore – the most among the top 10 firms – to Rs 2,00,155.69 crore.

The M-cap of ITC jumped by Rs 4,779.31 crore to Rs 2,59,608.76 crore, while that of CIL rose by Rs 3,695.07 crore to Rs 2,03,639.59 crore.

Tata Consultancy Services (TCS) saw an increase of Rs 3,330.02 crore in its market capitalisation during the week, taking its M-Cap to Rs 4,79,474.08 crore.

The valuation of Reliance Industries Ltd (RIL) soared by Rs 2,866.7 crore to Rs 3,24,212.65 crore while that of Infosys jumped by Rs 2,273.97 crore to Rs 2,51,710.68 crore.

HUL’s market cap jumped by Rs 898.01 crore to Rs 1,86,796.15 crore.

The market value of HDFC rose by Rs 805.02 crore to Rs 1,94,143.24 crore while that of HDFC Bank was up Rs 315.38 crore at Rs 2,70,982.09 crore.

The valuation of Sun Pharma went up by Rs 264.73 crore to Rs 1,90,494.92 crore.

In terms of ranking, TCS was at the top, followed by RIL, HDFC Bank, ITC, Infosys, CIL, ONGC, HDFC, Sun Pharma and HUL.

The Sensex rose by 319.49 points to settle at 25,838.71 for the holiday-shortened week.

Business Responsibility Reports Must for Top 500 Listed Firms: Sebi

Business Responsibility Reports Must for Top 500 Listed Firms: SebiNew Delhi: To ensure better compliance with corporate governance norms, the Securities and Exchange Board of India (Sebi) has notified new rules making it mandatory for top 500 listed companies to prepare annual business responsibility reports, covering their activities related to environment and stakeholder relationships.

Currently, the business responsibility reports (BRs) are mandatory for top 100-listed entities based on market capitalisation at stock exchanges BSE and NSE.

The decision by market regulator Sebi is part of larger efforts to improve corporate governance practices and more transparency in terms of reporting of various socially responsible activities carried out by the listed entities.

The move comes after Sebi’s board approved the decision last month.

The Securities and Exchange Board of India (Sebi) has now made it applicable for top 500 listed companies, based on their market capitalisation at the end of March every year, to submit business responsibility reports, it said in a notification.

The new regulation – Sebi (Listing Obligations and Disclosure Requirements) – would come into force from April, 2016.

In August 2012, Sebi made business responsibility reporting compulsory for top 100 listed entities based on market capitalisation in their annual reports.

The key areas required to be reported by the entities include environment, social, governance and stakeholder relationships.

Apple, GE, HP Among U.S. Firms Eyeing Iran Market

General Electric (NYSE:GE), Apple (NASDAQ:AAPL), HP Inc. (NYSE:HPQ), Schlumberger (NYSE:SLB) and other U.S. companies are reportedly preparing for the lifting of economic sanctions against Iran so they can enter the market of 77 million people.

Concerned they might lag Asian and European competitors in Iran, some U.S. companies plan to hit the ground running as soon as sanctions are lifted by drafting contracts and sending envoys, the Wall Street Journal reported.

Sanctions are expected to be eased in the wake of this year’s agreement between Iran, the U.S. and several other nations concerning Iran’s nuclear program.

Iran’s young, well-educated and tech-savvy consumer market is seen as potentially lucrative for Western firms.

Interested U.S. companies are dotting their I’s and crossing their T’s by consulting with officials from the State and Treasury departments to ensure talks with Tehran by their non-U.S. subsidiaries remain compliant with the law, sources told the Journal.

For example, Hewlett-Packard (Suisse) Sarl, HP’s Switzerland-based subsidiary, reportedly circulated draft agreements with Iranian distributors last month in order to resell its computer products. Non-U.S. HP distributors held meetings in Dubai and Tehran with the potential distributors.

Last year, Apple began contacting Iranian distributors about possibly entering the nation to sell iPhones, desktop computers and opening Apple stores if Western sanctions are sufficiently relaxed. But the negotiations have been slowed by Iran’s less-than-robust legal protections for intellectual property, according to the Journal.

Once sanctions are eased, Iran is also expected to attract billions of dollars worth of investment in oil and gas fields, attracting GE’s oil services unit as well as Houston-based Schlumberger, the world’s largest oilfield services company.

GE shares fell 0.4% to close at 30.83 on the stock market today, while Schlumberger slipped 0.7% to finish at 70.53, HP fell 0.2%, and Apple fell 0.5%.

FinMin, RBI plan to put curbs on capital funds, term loans for firms

Arun Jaitley

In order to develop the corporate bond market, the finance ministry and the Reserve Bank of India are planning to restrict the amount of working capital funds and term loans that companies can borrow from banks. The ministry and the regulator plan to encourage companies to meet a portion of their funding requirements by raising funds in the corporate debt market and through commercial papers.

Another measure on the cards is to lower the transaction in corporate bonds for all category of investors, and reserve a specific portion of the bonds for retail investors, just as it is done in case of share sale during initial public offers by companies, a finance ministry official said.

Corporate bond issuance in India is currently dominated by private placements with institutions, which accounts for over 95 per cent of the total issuance of corporate debt. “We have met the RBI a number of times in recent months and discussed ways to boost the corporate bond market. A roadmap is being prepared, which will be rolled out in due course. The plan is to get companies to raise more funds through corporate bonds and to attract institutional and retail investors to participate in the market,” the official said.

The Financial Stability and Development Council, chaired by finance ministerArun Jaitley, has discussed these steps as well.

The government further plans to amend the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act, 2002 to enable bond and debenture trustees to use provisions of this law in case of default by a corporate bond issuer.

At present, only banks and financial institutions can use the SARFAESI Act provisions in case of default. Amendments to the SARFAESI Act are being finalised and these are expected to be moved in the upcoming Budget session of the Parliament, the official said. One problem being faced in development of corporate bond market is that while the corporate loans given by banks are

not marked to market, there is a requirement of bonds to be marked to market, the

official said. This means whenever a company’s bonds rating come under pressure or there are doubts on the company’s repayment capacity, the bond investors including banks have to book mark-to-market losses in their books of accounts. In case of corporate loans, there is no such requirement of booking mark-to-market losses. The government and the RBI are trying to resolve this anomaly, the official said.

The RBI has also proposed that corporates may be encouraged to re-issue existing bonds under the same International Securities Identification Number or ISIN code. This is expected to augment market liquidity, reduce the cost of borrowings and prune the documentation requirements.

The official said that the Insolvency and Bankruptcy Code, 2015, which was introduced by the government in Parliament on Monday and later referred to a 30-member join parliamentary panel, would also help in developing the corporate bond market.

The bill aims freeing up banks’ resources for other productive uses and boosting credit markets by providing for faster liquidation of a company’s assets in case of defaults.

As per the proposed legislation, the corporate insolvency would have to be resolved within a period 180 days, extendable by a further 90 days. It also provides for fast-track resolution of corporate insolvency within
90 days.

Boost for corporate debt market

# Corporate bond issuance in India is currently dominated by private placements with institutions, which accounts for over 95% of the total issuance of corporate debt

# Only banks and financial institutions can use the SARFAESI Act provisions in case of default

# The government further plans to amend the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act, 2002 to enable bond and debenture trustees to use provisions of this law in case of default by a corporate bond issuer.

Market Wrap: S&P 500 Erases 2015 Loss as Tech Stocks Surge

Financial Markets Wall StreetNEW YORK – A tech share rally drove U.S. stocks up sharply for a second day Friday as earnings from companies including Microsoft beat analyst expectations, while health care shares rebounded from recent losses.

The gains left the S&P 500 in positive territory for the year and above its 200-day moving average for the first time since Aug. 19.

An unexpected rate cut in China added to the positive tone for U.S. stocks, which also registered gains for the week.

Microsoft (MSFT) shares rose 10.1 percent to $52.87, their highest in 15 years, after adjusted revenue beat expectations for the ninth quarter in a row.

Microsoft gave the biggest boost to the three indexes, accounting for nearly a fifth of the Dow’s gain and leading a strong rally in technology stocks. The S&P technology sector jumped 3 percent, leading gains among major sectors.

Alphabet, Google’s new holding company, and Amazon soared to record intraday highs after results beat expectations. Alphabet (GOOGL) ended up 5.6 percent at $719.33, while Amazon (AMZN) rose 6.2 percent to $599.03.

Facebook (FB) and Twitter (TWTR) also jumped, with Facebook rising above $100 for the first time.

“It’s being driven by the good earnings” from a number of companies, said Giri Cherukuri, head trader at OakBrook Investments in Lisle, Illinois. That may change the view on earnings “as people sit back and evaluate.”

“Companies with big international exposure have a big drag due to forex, but looking past that, companies are doing well.”

The Dow Jones industrial average (^DJI) rose 157.54 points, or 0.9 percent, to 17,646.7, the Standard & Poor’s 500 index (^GSPC) gained 22.64 points, or 1.1 percent, to 2,075.15 and the Nasdaq composite (^IXIC) added 111.81 points, or 2.3 percent, to 5,031.86.

Big Weekly Gains

For the week, the Dow rose 2.5 percent, the S&P 500 gained 2.1 percent and the Nasdaq jumped 3 percent.

The S&P 500 is now up 0.8 percent for the year so far and up 7.1 percent for October.

Analyst sentiment on overall third-quarter earnings has improved following the string of strong results from blue chips.

S&P 500 earnings for the period are now expected to have declined a more modest 2.8 percent, compared with a decline of 4.9 percent forecast at the start of the reporting season, according to Thomson Reuters data.

Among other gainers, Procter & Gamble (PG) rose 2.9 percent to $77.03 after its profit beat estimates.

On the Downside

Not all of the day’s earnings news was upbeat, though.

Shares of Whirlpool (WHR) dropped 8.7 percent to $145.90 after executives said currency would subtract $2.5 billion from the appliance-maker’s annual revenue. Whirlpool lowered its 2015 expectations even as it posted higher-than-expected third-quarter earnings.

Overseas, China’s central bank cut interest rates for the sixth time since November in another attempt to jumpstart a slowing economy.

NYSE advancers outnumbered decliners 1,806 to 1,252, for a 1.44-to-1 ratio; on the Nasdaq, 1,872 issues rose and 956 fell, for a 1.96-to-1 ratio favoring advancers.

The S&P 500 posted 54 new 52-week highs and 14 lows; the Nasdaq recorded 133 new highs and 65 lows.

About 7.6 billion shares changed hands on U.S. exchanges, above the 7.3 billion daily average for the past 20 trading days, according to Thomson Reuters (TRI) data.

What to watch Monday:

  • The Commerce Department releases new home sales for September at 10 a.m. Eastern time
  • The Federal Reserve Bank of Dallas releases its survey of manufacturing conditions in Texas for October at 10:30 a.m. Eastern time.

Earnings Season
These selected companies are scheduled to report quarterly financial results:

  • Cheesecake Factory (CAKE)
  • Hartford Financial Services (HIG)
  • Xerox (XRX)

Market Wrap: Dow, S&P 500 Slip as Apple, Energy Weigh

Financial Markets Wall StreetNEW YORK — The Dow and the S&P 500 edged lower Monday as energy shares dropped with oil prices and Apple retreated a day before its quarterly results.

Investors were cautious ahead of the Federal Reserve’s two-day policy meeting, which begins Tuesday. The market is looking for clues on the outlook for when the Fed may begin raising interest rates.

Apple (AAPL) shares fell 3.2 percent to $115.28, making it the biggest drag on all three major indexes, while a weak outlook from one of its suppliers, Dialog Semiconductor, led a fall in other semiconductors. An index of semiconductors was down 2 percent after three days of gains.

With Apple, it’s more about their forecast and China news and any upgrades they may want to announce.

The iPhone-maker reports quarterly results after the market closes Tuesday.

“With Apple, it’s more about their forecast and China news and any upgrades they may want to announce,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

The S&P energy sector fell 2.5 percent, leading sector declines for the S&P 500. Crude oil prices slipped as global oversupply pushed fuel storage sites close to capacity. Exxon (XOM) fell 2.1 percent to $81.22, while Chevron (CVX) was down 2.7 percent to $88.77.

U.S. stocks have mostly gained in October after a weak third quarter. The S&P 500 is up 7.9 percent for the month so far.

“It’s been a pretty big move up, so we’re seeing a little bit of consolidation today,” Meckler said.

The Dow Jones industrial average (^DJI) fell 23.65 points, or 0.1 percent, to 17,623.05, the Standard & Poor’s 500 index (^GSPC) lost 3.97 points, or 0.2 percent, to 2,071.18 and the Nasdaq composite (^IXIC) added 2.84 points, or 0.1 percent, to 5,034.70.

Among the top Nasdaq gainers, shares of Ctrip.com (CTRP) rose 22.1 percent to $90.78 after the online travel firm said it would merge with Qunar Cayman Islands. Qunar (QUNR) jumped 7.9 percent to $42.65.

Strong quarterly results from tech companies have helped improve expectations for overall U.S. third-quarter earnings.

S&P 500 earnings are estimated to have declined a more modest 2.8 percent in the quarter, compared with 4.2 percent forecast at the start of the month, according to Thomson Reuters (TRI) data.

Housing Slips

Data showed new home sales fell 11.5 percent in September, suggesting a softening of the housing market. An index of housing shares was down 0.4 percent.

Among other gainers, Pep Boys (PBY) jumped 23.4 percent to $14.99 after it agreed to be acquired by Bridgestone for $15 a share.

Piedmont Natural Gas (PDM) rose 36.9 percent to $57.82 after it agreed to be bought by Duke Energy. Duke Energy (DUK) fell 2.4 percent.

NYSE declining issues outnumbered advancers 1,916 to 1,153, for a 1.66-to-1 ratio; on the Nasdaq, 1,749 issues fell and 1,077 advanced, for a 1.62-to-1 ratio favoring decliners.

The S&P 500 posted 36 new 52-week highs and 8 lows; the Nasdaq recorded 111 new highs and 73 lows.

About 6.1 billion shares changed hands on U.S. exchanges, below the 7.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

What to watch Tuedsay:

  • The Commerce Department releases durable goods for September at 8:30 a.m. Eastern time.
  • Standard & Poor’s releases S&P/Case-Shiller index of home prices for August at 9 a.m.
  • The Conference Board releases the Consumer Confidence Index for October at 10 a.m.

Earnings Season
These selected companies are scheduled to report quarterly financial results:

  • Alibaba Group (BABA)
  • Apple (AAPL)
  • Comcast (CMCSA)
  • Dupont (DD)
  • Ford Motor Co. (F)
  • Gilead Sciences (GILD)
  • Merck & Co. (MRK)
  • Pfizer (PFE)
  • Reynolds American (RAI)
  • Twitter (TWTR)
  • United Parcel Service (UPS)

Market Wrap: Stocks Slip on Rate Uncertainty, Earnings

Financial Markets Wall StreetNEW YORK — U.S. stocks slipped Tuesday on uncertainty over the U.S. rate outlook and disappointing results from Ford and other companies.

Upbeat results from Apple after hours, however, could give the market a boost Wednesday.

Shares of Apple (AAPL), the biggest company by market capitalization, rose 2.8 percent to $116.89 after it reported higher-than-expected earnings and revenue. Apple’s stock ended the regular session down 0.6 percent at $114.55.

Nasdaq 100 e-mini futures also edged up after Apple’s results.

“Both earnings and revenues were above expectations, which I think was well embraced based on the fact that a lot of companies have been struggling on the top line,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co., which owns Apple shares.

Also after the bell, shares of Twitter (TWTR) dropped 11 percent to $27.89 after it reported results. Twitter’s stock ended the regular session up 1.5 percent at $31.34.

During the regular session, Ford (F) dropped 5 percent to $14.89 after quarterly results missed expectations, while JetBlue Airways (JBLU) fell 3.2 percent to $25.36 after it said it will make less money per mile in October than it did a year ago.

Shares of other airlines also fell, and the Dow Jones transportation average dropped 2.6 percent.
The Federal Reserve began its two-day policy meeting Tuesday. While expectations for a rate hike this week are slim, investors are looking for clues in its policy statement Wednesday as to when the Fed will begin to raise interest rates.

That’s going to be parsed every way possible,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

Casting more doubts on whether the Fed will raise rates this year, data showed U.S. non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, slipped last month after a downwardly revised decline in August.

The Dow Jones industrial average (^DJI) fell 41.62 points, or 0.2 percent, to 17,581.43, the Standard & Poor’s 500 index (^GSPC) lost 5.29 points, or 0.3 percent, to 2,065.89 and the Nasdaq composite (^IXIC) dropped 4.56 points, or 0.1 percent, to 5,030.15.

Movers and Shakers

Alibaba (BABA) rose 4 percent to $79.44 after the e-commerce giant reported better-than-expected revenue. After the bell, shares of Twitter dropped after it reported results. Twitter (TWTR) stock ended the regular session up 1.5 percent.

Declines in crude oil weighed further on energy shares, and the S&P energy index, down 1.2 percent, led sector declines for the S&P 500.

Health care was only one of two S&P 500 sectors to end in positive territory for the day. The index was up 1.7 percent after better-than-expected earnings from top drugmakers Pfizer and Merck. Pfizer (PFE) was up 2.4 percent at $34.99 and Merck (MRK) was up 1.1 percent at $53.47.

Rite Aid (RAD) shares jumped 42.6 percent to $8.67. Sources said Walgreens Boots Alliance (WBA) is nearing a deal to buy the rival drugstore chain.

Among other gainers, shares of hotel operators rose after The Wall Street Journal reported at least three Chinese firms were looking to bid for Starwood Hotels & Resorts Worldwide. Starwood (HOT) shares were up 9.1 percent at $74.81 while shares of Marriott International (MAR) were up 1.8 percent at $77.99.

NYSE declining issues outnumbered advancing ones 2,293 to 797, for a 2.88-to-1 ratio; on the Nasdaq, 2,003 issues fell and 820 advanced, for a 2.44-to-1 ratio favoring decliners.

The S&P 500 posted 14 new 52-week highs and 13 new lows; the Nasdaq recorded 56 new highs and 122 new lows.

Federal Reserve policymakers meet to set interest rates and release a statement at 2 p.m. Eastern time.

Earnings Season:
These selected companies are scheduled to report quarterly financial results:

  • Anthem (ANTM)
  • Amgen (AMGN)
  • General Dynamics (GD)
  • GlaxoSmithKline (GSK)
  • Mondelez International (MDLZ)
  • Northrup Grumman (NOC)
  • Occidental Petroleum (OXY)
  • PayPal (PYPL)
  • Walgreens Boots Alliance (WBA)
  • Williams Cos. (WMB)

Market Wrap: Stocks Climb as Fed Puts Dec. Rate Hike in Play

Financial Markets Wall StreetNEW YORK — U.S. stocks ended sharply higher Wednesday after a volatile session as the Federal Reserve gave a vote of confidence in the U.S. economy by signaling a December interest rate hike was still on the table.

S&P financials, which benefit from higher borrowing rates, shot up following the Fed statement and led sector gains. The financial index ended up 2.4 percent, its biggest percentage gain in seven weeks. The KBW Nasdaq regional bank index jumped 4.1 percent.

S&P utilities, which tend to do worse when interest rates are rising, fell 1.1 percent and led S&P sector declines.

The Fed left rates unchanged, as expected, and, in a direct reference to its next meeting, put a December rate hike firmly in play. It also downplayed global economic headwinds in its statement.

Stocks initially sold off following the statement, with the S&P 500 erasing close to a 1 percent gain, but quickly rebounded to end at the day’s highs as investors saw the statement as a sign the Fed has confidence the U.S. economy can sustain a rate hike.

“Obviously the first move [in stocks] is down, which is conventional wisdom. However, I do like the idea of the Fed having more confidence in the economy, less concerned about the global backdrop and willing to ring the bell on the long-term health of the U.S. economy with a rate hike,” said Michael Marrale, head of research, sales and trading at ITG in New York.

The Fed hasn’t raised rates in nearly a decade.

The Dow Jones industrial average (^DJI) rose 198.09 points, or 1.1 percent, to 17,779.52, the Standard & Poor’s 500 index (^GSPC) gained 24.46 points, or 1.2 percent, to 2,090.35, its highest in more than two months.

The Nasdaq composite (^IXIC) added 65.55 points, or 1.3 percent, to 5,095.69, while the Nasdaq 100 index of biggest non-financial names rose 0.9 percent to 4,678.57, just shy of a 15-year high.

Movers and Shakers

A 4.1 percent gain in Apple (AAPL) shares to $119.27 also helped support indexes a day after stronger-than-expected results.

The company sold 48 million iPhones in the latest quarter and posted a near doubling of revenue from China, allaying concerns about its business in the world’s second-largest economy.

On the flip side, Twitter (TWTR) shares fell 1.5 percent to $30.87 while Akamai Technologies (AKAM) dropped 16.7 percent to $62.91, Both reported disappointing results late Tuesday.

The S&P energy sector snapped a three-day losing streak, ending up 2.2 percent, after a sharp rally in crude oil prices .

After the bell, shares of GoPro (GPRO) dropped 15.2 percent to $25.62 following its results.

Advancing issues outnumbered declining ones on the NYSE by 2,428 to 645, for a 3.76-to-1 ratio on the upside; on the Nasdaq, 2,252 issues rose and 605 fell for a 3.72-to-1 ratio favoring advancers.

The S&P 500 posted 35 new 52-week highs and six new lows; the Nasdaq recorded 155 new highs and 82 new lows.

About 8.5 billion shares changed hands on U.S. exchanges, well above the 7.1 billion daily average for the past 20 trading days, according to Thomson Reuters (TRI) data.

What to watch Thursday:

  • At 8:30 a.m. Eastern time, the Labor Department releases weekly jobless claims, and the Commerce Department releases third-quarter gross domestic product.
  • At 10 a.m., Freddie Mac releases weekly mortgage rates, and the National Association of Realtors releases pending home sales index for September.

Earnings Season
These selected companies are scheduled to report quarterly financial results:

  • Aetna (AET)
  • Altria Group (MO)
  • ConocoPhillips (COP)
  • Goodyear Tire & Rubber Co. (GT)
  • Johnson Controls (JCI)
  • LinkedIn (LNKD)
  • MasterCard (MA)
  • Starbucks (SBUX)
  • Teva Pharmaceutical (TEVA)
  • Time Warner Cable (TWC)