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US: Stocks surge ahead of Fed rate decision
[NEW YORK] Wall Street stocks rose solidly on Tuesday, taking cues from European bourses and the oil market ahead of an expected US Federal Reserve interest rate hike.
The Dow Jones Industrial Average climbed 156.41 points (0.90 per cent) to 17,524.91.
The broad-based S&P 500 rose 21.47 (1.06 per cent) to 2,043.41, while the tech-rich Nasdaq Composite Index gained 43.13 (0.87 per cent) to 4,995.36.
European stocks posted even larger gains as oil prices rose following a bruising stretch since the Organisation of the Petroleum Exporting Countries on December 4 took no action to cut output in response to declining prices.
Analysts said last week's retreat in stocks set the stage for a rally.
"The market got oversold a bit and is now going through a bounce that I think will continue once the Fed will do what most people believe they're going to do, that's raise rates," said Sam Stovall, chief investment strategist at S&P Capital IQ.
A decision by the Fed Wednesday to hike rates will "lift the veil of uncertainty," he added.
Petroleum-linked stocks were strong, with Dow members Chevron and ExxonMobil gaining 3.8 per cent and 4.5 per cent respectively and oil services company Weatherford International climbing 4.6 per cent.
Other strong sectors included large banks, which are expected to score higher profits from increased interest rates, and biotech stocks.
Apple dropped 1.8 per cent after Credit Suisse predicted a "subdued iPhone cycle for the next few quarters" at the tech giant. Credit Suisse pointed to a lackluster outlook from Apple supplier Dialog Semiconductor, which cited "weaker than expected" demand in mobile systems.
Oil services company Baker Hughes fell 0.6 per cent after it and Halliburton pushed back the deadline for a proposed merger following objections by antitrust officials to their divestment plan. Halliburton rose 1.5 per cent.
Dow member 3M Company dropped 6.0 per cent as it projected full-year earnings of US$7.55 per share, below the prior range of US$7.60 to US$7.65 per share. 3M blamed the "realities of a continued slow-growth global economy."
Valeant Pharmaceuticals International bolted 16.4 per cent higher after announcing a new distribution agreement with pharmacy chain Walgreens that will reduce prices on branded dermatological and ophthalmological products by 10 per cent. Walgreens' parent, Walgreens Boots Alliance, dipped 0.6 per cent.
Chipmaker Qualcomm rose 2.5 per cent as it ruled out a breakup of the company following a strategic review, rejecting a campaign by activist fund Jana Partners.