US: Stocks end modestly higher after volatile session

[NEW YORK] Wall Street stocks finished modestly higher Wednesday as optimism about strong earnings and upbeat economic data was offset somewhat by concerns about US monetary policy.

After declining for two straight days, US stocks opened solidly higher before losing steam. Leading indices briefly went negative after the Federal Reserve's policy statement suggested a possible acceleration of interest rate hikes due to rising inflation.

But by the close the indices had regained ground. The Dow Jones Industrial Average finished up 0.3 per cent at 26,149.39.

The broad-based S&P 500 edged up 0.1 per cent to end the day at 2,823.81, while the tech-rich Nasdaq Composite Index advanced 0.1 per cent to 7,411.48.

The Fed left the benchmark interest rate unchanged, but said it expects inflation to move up this year - a change from its previous statement and a possible signal of faster interest rate increases ahead.

Investors have been edgy in this week's sessions due to higher yields on US Treasury bonds and the chance tightening monetary policy will derail the stocks rally.

"If there's one thing that's changed in investor psychology it's the contemplation of what higher interest rates mean in an equity market that's fully valued," said Art Hogan, chief market strategist at Wunderlich Securities.

"There are a lot of people calling this a bubble at current valuations," Hogan said.

Boeing was by far the biggest winner in the Dow, surging almost five percent after it reported a 92 per cent rise in fourth-quarter profits to US$3.1 billion. It also offered a bullish outlook on 2018 thanks to an expected rise in aircraft deliveries and a lower US tax rate.

Xerox gained 4.4 per cent after it sealed an agreement to be merged into a new entity controlled by Fujifilm.

But 21st Century Fox sank 4.1 per cent on unease over reports it agreed to pay more than US$660 million a year for broadcast rights for the National Football League's Thursday night games. Fox executives described the NFL contract as a rare and exceptional opportunity.

Pharmaceutical shares pulled back after President Donald Trump pledged in his State of the Union Address to address runaway drug prices. Dow members Merck, Pfizer and Johnson & Johnson all lost two percent or more, and biotechs including Gilead Sciences also were sharply lower.

AFP