Banks rally on rate outlook, lead S&P 500 to new high
New York (Sept 18) U.S. stocks were higher in afternoon trading on Thursday, with the S&P 500 hitting a record peak a day after the U.S. Federal Reserve renewed its commitment to keeping interest rates low.
The Fed said Wednesday at the conclusion of a two-day policy meeting it would keep interest rates near zero for a "considerable time," language supportive of equities which some had expected to be dropped from the statement.
However, the central bank's outlook included forecasts for higher-than-expected rates in 2015 and 2016, which helped financial stocks lead gains on Wall Street.
"Any rate hike will be data dependent, and the Fed won’t do it anywhere in the near-to-intermediate term unless they think it will have no impact on the economy," said John Manley, chief equity strategist at Wells Fargo Funds Management in New York.
"A higher rate structure helps financials generate more profits. Higher interest rates are not bad for (the sector) unless it meant the Fed is trying to slow the economy."
The Dow Jones industrial average .DJI was rising 95.87 points, or 0.56 percent, to 17,252.72, the S&P 500 .SPX was gaining 8.08 points, or 0.4 percent, to 2,009.65 and the Nasdaq Composite .IXIC was adding 27.77 points, or 0.61 percent, to 4,589.95.
The S&P hit a high of 2,011.79.
The largest percentage gainer on the New York Stock Exchange was Penn West Petroleum (PWE.N), which was rising 7.99 percent, while the largest percentage decliner was Pier 1 Imports (PIR.N), down 19.11 percent a day after it slashed its full-year earnings forecast.
Among the most active stocks on the NYSE were Bank of America (BAC.N), up 1.97 percent to $17.10; Rite Aid Corp (RAD.N), down 18.60 percent to $5.41 after it cut its full-year profit forecast for a second time this year, and GE (GE.N), up 0.74 percent to $26.24.
On the Nasdaq, Yahoo (YHOO.O), down 1.5 percent to $41.95; Vivus Inc (VVUS.O), up 17.7 percent to $4.57, and NII Holdings (NIHD.O), up 59.1 percent to $0.11 were among the most actively traded.
Vivus rose after an erectile-dysfunction drug it co-developed was approved by the U.S. Food and Drug Administration.
Advancing issues were outnumbering declining ones on the NYSE by 1,841 to 1,181, for a 1.56-to-1 ratio on the upside; on the Nasdaq, 1,653 issues were rising and 1,003 falling for a 1.65-to-1 ratio.
The benchmark S&P 500 index was posting 54 new 52-week highs and 7 new lows; the Nasdaq Composite was recording 72 new highs and 51 new lows.
U.S. housing starts and permits fell in August, but upward revisions to the prior month's data suggested the housing market continued to gradually improve. Separate data showing a sharp drop in the number of Americans filing new claims for unemployment benefits last week suggested the slowdown in job growth last month was probably an aberration.