USA stocks close higher ahead of Fed meeting

Andrew Cummings
September 19, 2017

A world stock index hit a record high on Monday and the dollar rose to a more-than seven-week peak against the yen as investors awaited clues from the U.S. Federal Reserve on the timing of further rate hikes and tensions over North Korea eased.

Shares of the major banks Bank of America, Morgan Stanley and Citigroup were up more than 1 percent.

The industrial sector (+0.6%) benefited from the positive performances of influential Dow components Boeing and Caterpillar, which climbed 1.6% and 2%, respectively.

On Wall Street, the Dow had a record close for the fifth session in a row while the S&P set a closing record for the second consecutive session, led by gains in financial shares.

"Market continues to firm up". Recent trading has had a pronounced upward bias, though uncertainty pertaining to North Korea has been a headwind.

The main event, however, will be the Fed's meeting on Tuesday and Wednesday, at which it is likely to take another step toward policy normalization in what is rapidly becoming a worldwide trend.

Persistently weak readings of inflation that have remained below the Fed's 2 percent target rate have been a concern for policymakers.

The central bank is expected to announce plans to begin unwinding its US$4.2 trillion (RM17.6 trillion) portfolio of Treasuries and mortgage-backed securities, almost a decade after the global financial crisis.

The Dow Jones Industrial Average gained 63.01 points, or 0.28 percent, to 22,331.35. The NASDAQ Composite Index touched fresh intraday high levels and closed the day at 6,454.64 with a gain of 0.1%. Increasing US bond yields pushed financial stocks, as interest rates tend to lift bank profits, but interest-sensitive sectors like utilities weakened.

Among other stocks, Orbital ATK saw its shares jump by about 20% after the missile and rocket maker agreed to be bought by Northrop Grumman for $7.8bn.

Stock movers: Shares of Equifax Inc.(EFX) gave up 1.7%, putting the credit-reporting company's stock on track to extend a selloff sparked by its disclosure of a massive data breach.

Advancing issues outnumbered declining ones on the NYSE by a 1.36-to-1 ratio; on Nasdaq, a 1.55-to-1 ratio favoured advancers. Building permits rose by 5.7% to a rate of 1.3 million, slightly higher than an expected 1.22 million.

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