Stock Market News For February 23, 2017
The Dow closed at an all-time high for a ninth straight session on Wednesday helped by DuPont. The blue-chip index logged its best record setting streak in three decades. But, the broader market struggled after minutes from the Fed’s last meeting showed that the central bank is comfortable in hiking rates “fairly soon”. A low interest environment had lent support to the U.S. equity market for a considerable period of time. The S&P 500, in particular, ended modestly weaker due to decline in energy shares. A pullback in the price of oil adversely affected energy companies.
The Dow Jones Industrial Average (DJI) advanced 0.2% to close at 20,775.60. The index registered its longest run of record closes since 1987. The S&P 500, on the other hand, declined 0.1% to close at 2,362.82. The tech-laden Nasdaq Composite Index closed at 5,860.63, decreasing 0.1%. The fear-gauge CBOE Volatility Index (VIX) went up 1.5% to settle at 11.74. A total of around 6.5 billion shares were traded on Wednesday, below the last 20-session average of 6.8 billion, while declining issues outnumbered advancing ones on the NYSE.
DuPont Boosts Dow
The Dow closed about 30 points higher on Wednesday, with E I Du Pont De Nemours And Co contributing most of the gains. The company is poised to win an antitrust approval from European Union regulators for its $130 billion merger with Dow Chemical Co. The regulator won’t seek third parties' views to the changes, a clear indication that it will approve the deal.
Earlier in the month, both the companies wanted to sell a portion of DuPont's crop protection business as well as Dow's acid copolymers and ionomers business. Shares of both Du Pont and Dow gained 3.4% and 0.2%, respectively.
Rate Hike in the Cards?
Most of the broader equity benchmarks, however, struggled after minutes from the Federal Reserve's last meeting kept alive a potential near-term interest rate hike. The minutes said that “many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the committee’s maximum-employment and inflation objectives increased”
Fed Chair Janet Yellen expects a gradual rate increase amid a modestly expanding economy and inflation that should touch the Fed’s desired target rate of 2% in the near term. She said that “at our upcoming meetings, the Fed will evaluate whether employment and inflation are continuing to evolve in line with…expectations, in which case a further adjustment of the federal funds rate would likely be appropriate”
Drop in Oil Prices
U.S. crude oil price, in the meantime, declined 1.4% to $53.59 a barrel as investors remained worried about high U.S. stockpiles. Decline in oil prices weighed on energy shares, which eventually dragged the S&P 500 downwards.
The Energy Select Sector SPDR (XLE) moved 1.5% lower, the highest loser among the S&P 500 sectors. Key energy companies including Exxon Mobil Corporation (XOM) and Chevron Corporation (CVX) both lost 1.2%.