US close: Equities bullish ahead of FOMC statement
US equities disregarded weak trading on European and Asian bourses and enjoyed a strong day, rewriting the narrative of a session where nerves ahead of the Federal Reserve's policy statement on Wednesday were expected to dominate.
The Dow Jones was up 0.59% and both the Nasdaq and S&P 500 were up 0.75%, with the latter enjoying its strong day in several weeks.
As the central bank's Federal Open Markets Committee (FOMC) began its two-day meeting to discuss policy, most notably around the timing of an inevitable hiking of short-term interest rates.
Fed chair Janet Yellen is expected to hold interest rates at their low but carve a further $20bn off bond purchases at the end of their two-day meeting which begins on Tuesday, ending the stimulus it has carried out since September 2012.
As this is almost a concrete certainty, the market will instead conduct a close reading of Yellen's rhetoric, particularly for the omission of the pledge that there is “considerable time” after this conclusion of asset purchases before the central bank will look to raise interest rates.
In which event, economists suggest this would be a six-month "starters' gun" warning before a rate rise, but even a slight change in tone within the statement could precipitate considerable volatility on Wednesday, especially if a more hawkish tone is perceived.
Market sentiment today seemed to lean towards a later rise than recent more hawkish rumours had suggested, with PPI data nudging opinion in this direction.
In the only major macroeconomic data of the day, PPI was shown to be unchanged in August, in line with forecasts. Analysts said the figures were an indication of muted inflation pressures, giving extra ammunition for the Fed to not hurry its decision.
A fresh survey from Bloomberg also found that a slender majority of economists believe Yellen is likely to raise interest rates only gradually between 2015 and 2017 as inflation remains muted.
Strategist Scott Wren at Wells Fargo summed up why the consensus forecast of a June rate hike may still be too soon for the Fed: "It does not want to make the mistake of raising interest rates too soon and risk tipping the economy back toward a slower pace of growth."
In corporate news, memory chip maker Micron was highest riser after unveiling its news “class-leading” solid-state drive to add a high-performance product to its value range.
A sell-off in the tech sector saw Netflix led Facebook, eBay and even Apple on the leading fallers list, despite Apple reporting its best ever first-day pre-orders for an iPhone.
Treasury prices climbed, as the rate on 10-year German debt dropped 0.03% to 1.4% and yields on UK bonds of similar maturity lost two basis points to 2.52%.
Oil price rose slightly, with West Texas Intermediate Crude gaining 0.5% and trading at $93.4 a barrel.
S&P 500 - Risers
Micron Technology Inc. (MU) $31.44 +4.73%
United States Steel Corp. (X) $41.42 +4.44%
Humana Inc. (HUM) $132.36 +3.68%
Celgene Corp. (CELG) $92.55 +3.45%
Altera Corp. (ALTR) $36.25 +3.36%
Eog Resources Inc. (EOG) $105.24 +3.27%
GameStop Corp. (GME) $44.86 +3.10%
Xilinx Inc. (XLNX) $43.22 +2.99%
Public Service Enterprise Group Inc. (PEG) $37.97 +2.82%
Sandisk Corp. (SNDK) $100.00 +2.73%
S&P 500 - Fallers
Netflix Inc. (NFLX) $456.83 -4.14%
First Solar Inc. (FSLR) $70.68 -2.89%
Fossil Group Inc (FOSL) $100.14 -2.78%
Facebook Inc. (FB) $76.08 -1.81%
AFLAC Inc. (AFL) $58.93 -1.52%
International Paper Co. (IP) $49.09 -1.43%
Alcoa Inc. (AA) $16.16 -1.40%
Harley-Davidson Inc. (HOG) $63.55 -1.37%
Intuitive Surgical Inc. (ISRG) $474.46 -1.30%
eBay Inc. (EBAY) $51.61 -1.11%
Dow Jones I.A - Risers
Unitedhealth Group Inc. (UNH) $87.16 +1.31%
Visa Inc. (V) $217.26 +1.22%
Exxon Mobil Corp. (XOM) $97.44 +1.19%
General Electric Co. (GE) $26.22 +1.16%
American Express Co. (AXP) $88.37 +1.13%
Johnson & Johnson (JNJ) $105.89 +1.12%
Microsoft Corp. (MSFT) $46.75 +1.10%
Intel Corp. (INTC) $34.92 +1.10%
Home Depot Inc. (HD) $90.29 +1.02%
Verizon Communications Inc. (VZ) $48.96 +0.82%
Dow Jones I.A - Fallers
Nike Inc. (NKE) $81.20 -0.50%
Caterpillar Inc. (CAT) $104.86 -0.00%
Nasdaq 100 - Risers
Micron Technology Inc. (MU) $31.44 +4.73%
Celgene Corp. (CELG) $92.55 +3.45%
Altera Corp. (ALTR) $36.25 +3.36%
Xilinx Inc. (XLNX) $43.22 +2.99%
Illumina Inc. (ILMN) $172.93 +2.88%
Sandisk Corp. (SNDK) $100.00 +2.73%
Regeneron Pharmaceuticals Inc. (REGN) $355.47 +2.73%
Tesla Motors Inc (TSLA) $260.70 +2.69%
Mylan Inc. (MYL) $47.95 +2.57%
Keurig Green Mountain Inc (GMCR) $134.25 +2.39%
Nasdaq 100 - Fallers
Netflix Inc. (NFLX) $456.83 -4.14%
Facebook Inc. (FB) $76.08 -1.81%
Intuitive Surgical Inc. (ISRG) $474.46 -1.30%
eBay Inc. (EBAY) $51.61 -1.11%
Liberty Global plc Series A (LBTYA) $43.48 -0.98%
Twenty-First Century Fox Inc Class A (FOXA) $34.74 -0.87%
Apple Inc. (AAPL) $100.85 -0.74%
Expeditors International Of Washington Inc. (EXPD) $42.12 -0.68%
Mattel Inc. (MAT) $34.09 -0.67%
Dish Network Corp. (DISH) $65.54 -0.64%