U.S. stocks set fresh records on Tuesday with the Dow Jones Industrial Average closing at a high for the seventh session in a row as it moved within 100 points of the 20,000 milestone ahead of the Federal Reserve’s interest-rate decision Wednesday.
The market is pricing in a nearly 100% chance that the Federal Open Market Committee will lift key interest rates, which leaves much attention on clues for future policy decisions.
The Dow /zigman2/quotes/210598065/realtime DJIA +0.38% climbed 114.78 points, or 0.6%, to end at 19,911.21 after touching an intraday high of 19,953.75. Intel Corp. /zigman2/quotes/203649727/composite INTC +0.71% and Exxon Mobil Corp. /zigman2/quotes/204455864/composite XOM +1.98% contributed the most to the rise in the benchmark.
The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.81% rose 14.76 points, or 0.7%, to close at 2,271.72, with nine of the index’s 11 sectors in positive territory. The tech-heavy Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +1.53% added 51.29 points, or 1%, to finish at 5,463.83.
Both the S&P 500 and Nasdaq ended at record levels with the large-cap index hitting its 18th closing high.
U.S. stocks have rallied since President-elect Donald Trump defeated Democrat Hillary Clinton in an upset victory in the Nov. 8 U.S. election. Investors are betting that Trump’s proposed policies, including corporate tax cuts, infrastructure spending and deregulation, will be unequivocally pro-business.
Mike Antonelli, equity sales trader at R.W. Baird & Co., noted that Tuesday’s rally was broad-based, and that tech shares were leading as investors saw attractive valuations across the sector.
“We’re in full breakout mode here,” Antonelli said.
The central bank will deliver its rate announcement on Wednesday at 2 p.m. Eastern time. The bank is widely expected to raise its benchmark rate by 25 basis points.
With a rate increase essentially a foregone conclusion, investors will closely scrutinize the Fed’s tone for clues to the central bank’s plans for 2017, said James Abate, chief investment officer at Centre Asset Management.
“It’s really going to be expectations for commentary from the Fed related to the pace of rate increases in 2017,” Abate said.
Michelle Meyer, U.S. economist at Bank of America Merrill Lynch, expects Chairwoman Janet Yellen to maintain a cautious tone at her news conference following the Fed’s decision.
“In our view, the risk is for near-term rates to increase and the dollar to strengthen following the meeting,” said Meyer in a note.