US open: Stocks rally as investors price in Fed rate hike
US stocks rallied on Tuesday as investors priced in a rate hike by the Federal Reserve for the second time in nearly 10 years, with the tone of the accompanying statement likely to be scrutinised for further clues.
The Fed kicked off its last policy meeting of the year in Washington amid expectations of a 25 basis point rise in interest rates. An announcement will be made on Wednesday around 1900 GMT.
The Dow Jones Industrial Average rose 0.35% to 19,865.83, the S&P 500 increased 0.48% to 2,267.85, and the Nasdaq gained 1.1% to 5,472.07 at 1527 GMT.
On Monday the Dow Jones Industrial Average closed at an all-time high, the latest record closing since Donald Trump's electoral victory and opened on Tuesday with another high of 19,902 points.
Michael Hewson, chief market analyst at CMC Markets, said: “Financial markets remain fairly sanguine about the outcome of tomorrow’s rate decision with a 0.25% rise in rates pretty much already priced in.
“The US dollar has continued to come under pressure, slipping back a touch, as the last Fed meeting of 2016 gets under way… There appears to be some twitchiness setting in that while we will see a rise in rates, that the Fed may well issue a dovish message in order to take some of the steam of this current bout of US dollar strength.”
Meanwhile, oil prices were little changed, paring earlier gains as the International Energy Agency said in its monthly report that the agreement by OPEC to cut production by 1.2m barrels a day and by non-OPEC nations to cut by 558,000 barrels should help balance supply and demand by the first half of 2017.
The IEA said OPEC countries produced 34.2m barrels a day last month, up 300,000 from October, adding that the said the next few weeks were crucial for markets following the OPEC deal.
Brent crude was 0.05% higher at $55.72 a barrel and West Texas Intermediate was also up 0.05% to $52.80.
Gold on Comex was down 0.39% to 1,161.60 per troy ounce.
In currency markets, the dollar was up 0.26% to 115.32 against the yen amid expectations of a Fed rate hike. It also crept higher by 0.04% to 09406 versus the euro, but was down 0.33% to 0.7863 versus sterling.
On the date front, American import prices dropped in November for the first time in three months, as fuel prices fell.
The import price index declined 0.3%, while fuel imports slid 3.9%. Excluding fuel, the price of imports slipped 0.1%, while export prices were down 0.1%.
In corporate news, data analytics firm Inovalon Holdings plunged 35.02% after it downgraded its annual guidance late on Monday.
Apple gained 1.53% after the Wall Street Journal said the technology giant was looking to invest in a $100bn fund being raised by Japan’s SoftBank.
SeaWorld Entertainment jumped 3.66% as analysts at Janney Montgomery Scott boosted the company’s rating as they remained bullish on improvements made to theme parks in Orlando, Florida.