US stocks gain ahead of Fed rate decision
NEW YORK—US stocks rose strongly for the second straight session Wednesday ahead of the Federal Reserve’s decision on whether to raise interest rates for the first time in nine years.
The Dow Jones Industrial Average rose 140.10 points (0.84 percent) to 16,739.95.
The broad-based S&P 500 rose 17.22 (0.87 percent) to 1,995.31, while the tech-rich Nasdaq Composite Index gained 28.72 (0.59 percent) to 4,889.24.
Weighing whether to finally break from its easy money stance dating to the 2008-2009 crisis, the Fed is scheduled to announce its rate decision at 1800 GMT Thursday.
Michael James, managing director of equity trading at Wedbush Securities, said traders increasingly believe the Fed either will not hike rates, or accompany an increase with dovish commentary suggesting additional increases are not planned anytime soon.
Petroleum-linked stocks rallied strongly on a nearly 6 percent climb in US oil prices. Dow member ExxonMobil rose 2 percent, Anadarko Petroleum tacked on 5.2 percent and Weatherford International gained 5.5 percent.
Online travel companies Expedia and Orbitz Worldwide jumped 4.9 percent and 6.4 percent respectively on news the US Justice Department approved their merger. Justice said the deal was “unlikely to harm competition and consumers.”
US shares of Anheuser-Busch InBev climbed 6.8 percent on news that the Belgian-Brazilian drinks giant plans a takeover bid for Britain’s SABMiller, a transaction that would combine the world’s two biggest brewers. SABMiller shares jumped by about a fifth in London.
Molson Coors Brewing, which could benefit in the deal if SABMiller is forced to sell to it SAB’s shareholding in their Colorado-based joint venture MillerCoors, surged 14.2 percent.
Hewlett-Packard jumped 5 percent after announcing another bruising round of job cuts in connection with the company’s corporate split. The reorganization will lead to job losses of 25,000 to 30,000 on top of tens of thousands of cuts in recent months.
Dow member General Electric rose 2.5 percent after announcing it closed two more sales of GE Finance assets, bringing total real estate divestitures to $30 billion as it significantly scales back its finance business.
Delivery giant FedEx fell 2.9 percent as it trimmed its full-year earnings forecast to $10.40-$10.90 per share, 20 cents below the prior range. The company cited weaker-than-expected economic conditions, especially in manufacturing and global trade.
Bond prices fell. The yield on the 10-year US Treasury rose to 2.30 percent from 2.28 percent Tuesday, while the 30-year advanced to 3.08 percent from 3.06 percent. Bond prices and yields move inversely.
