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Stocks gain as Fed keeps rates unchanged and signals no rate hike in 2020
11-Dec-19 16:25 ET
Dow +29.58 at 27911.21, Nasdaq +37.87 at 8654.06, S&P +9.11 at 3141.63

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The S&P 500 increased 0.3% on Wednesday, as investors remained comforted by the few surprises in the FOMC's latest policy directive and Fed Chair Powell's press conference. The Nasdaq Composite (+0.4%) pulled out ahead, while the Dow Jones Industrial Average (+0.1%) and Russell 2000 (unch) finished closer to their flat lines.

The FOMC voted unanimously to leave the target range for the fed funds rate at 1.50-1.75%, as was widely expected. Thus, the positive reaction in the market may have been more attributed to the median projection for the policy rate in 2020 signaling no change. Fed Chair Powell for his part reiterated he would need to see a persistent and significant rise in inflation to hike rates.

The broader advance was kept in check, though, with the S&P 500 materials (+0.7%), information technology (+0.7%), and industrials (+0.7%) sectors finishing atop the standings. The real estate (-0.8%), financials (-0.2%), and energy (-0.2%) sectors finished in negative territory.

Generally, today's Fed news was viewed favorably, but several upcoming events likely helped restrain risk sentiment. Coming up are an ECB policy decision and UK election on Thursday and another round of tariffs on Chinese imports on Sunday, which may or may not happen. The trade uncertainty presumably had more influence on sentiment.

Strikingly, the trade-sensitive Philadelphia Semiconductor Index (+2.2%) posted an outsized gain. All 30 components finished higher, as the space likely drew support from the positive results and upbeat guidance from Photronics (PLAB 15.13, +2.56, +20.4%).

On the other hand, Dow components Home Depot (HD 212.00, -3.90, -1.8%) and Chevron (CVX 116.22, -1.67, -1.4%) weighed on the price-weighted index amid some negative news. Home Depot provided preliminary FY20 sales guidance that was below expectations. Chevron announced an $11 billion write-down of its gas assets in the fourth quarter.

U.S. Treasuries, which were already trending higher before the FOMC announcement, extended gains during Mr. Powell's press conference. Both the 2-yr yield and 10-yr yield declined four basis points each to 1.61% and 1.79%, respectively, with investors presumably unconcerned about inflation. The U.S. Dollar Index fell 0.3% to 97.10. WTI crude fell 0.8% (-0.47) to $58.74/bbl.

Reviewing Wednesday's economic data, which included the Consumer Price Index for November, the Treasury Budget for November, and the weekly MBA Mortgage Applications Index:

The Consumer Price Index (CPI) increased 0.3% month-over-month in November (Briefing.com consensus +0.2%) and core CPI, which excludes food and energy, increased 0.2%, as expected, for the second straight month.
The key takeaway from the report is that there was an uptick in prices across most key categories. That uptick is something the Fed wants to see at this juncture and it won't be quick to stamp it out with a rate hike, particularly since the Fed's favorite inflation gauge -- the PCE Price Index -- is still running comfortably below the longer-run 2.0% inflation target.
The Treasury Budget for November showed a deficit of $208.8 billion versus a deficit of $204.9 billion in the same period a year ago. This budget data is not seasonally adjusted, so the November deficit cannot be compared to the deficit of $134.5 billion for October.
The budget deficit over the last 12 months is $1.022 trillion versus $1.018 trillion in October. The fiscal year-to-date deficit is $343.3 billion versus $305.4 for the same period a year ago.
The weekly MBA Mortgage Applications Index increased 3.8% following a 9.2% drop in the prior week.

Looking ahead, investors will receive the Producer Price Index for November and the weekly Initial and Continuing Claims report on Thursday.

Nasdaq Composite +30.4% YTD
S&P 500 +25.3% YTD
Russell 2000 +21.0% YTD
Dow Jones Industrial Average +19.7% YTD

Market Snapshot
Dow 27911.21 +29.58 (0.11%)
Nasdaq 8654.06 +37.87 (0.44%)
SP 500 3141.63 +9.11 (0.29%)
10-yr Note -2/32 1.798
NYSE Adv 1839 Dec 1038 Vol 753.2 mln
Nasdaq Adv 1731 Dec 1359 Vol 2.0 bln

Industry Watch
Strong: Materials, Information Technology, Industrials
Weak: Real Estate, Energy, Financials

Moving the Market

-- FOMC keeps fed funds rate unchanged as expected, signals no rate hike in 2020

-- Relative strength in the trade-sensitive areas of the market: semiconductors, industrials, materials, and technology

-- Home Depot (HD), and Chevron (CVX) drag on the Dow

WTI crude posts decline as inventories rise more than expected
11-Dec-19 15:25 ET
Dow +13.07 at 27894.70, Nasdaq +37.39 at 8653.58, S&P +8.74 at 3141.26

[BRIEFING.COM] The S&P 500 currently trades higher by 0.3% at the conclusion of Fed Chair Powell's press conference, which was a nonevent like the FOMC decision.

One last look at the S&P 500 sectors shows eight of the 11 groups trading in positive territory, led by the materials (+0.7%) and information technology (+0.7%) sectors. The real estate (-0.8%), financials (-0.2%), and energy (-0.1%) sectors trade lower.

WTI crude fell $0.47 (-0.8%) to $58.74/bbl amid some bearish inventory data out of the EIA.