U.S. stocks were moving higher in afternoon trading Wednesday following the Federal Reserve's widely expected decision to raise short-term interest rates for the third time this year. The central bank also said that the U.S. economy was on sound footing. Health care, technology and industrials stocks accounted for much of the market's gains. Banks lagged the broader market.
Smaller-company stocks notched some of the biggest gains after the GOP leadership in the House and Senate reached a deal on a tax package.
KEEPING SCORE: The Standard & Poor's 500 index rose 5 points, or 0.2 percent, to 2,669 as of 3:08 p.m. Eastern Time. The Dow Jones industrial average gained 129 points, or 0.5 percent, to 24,634. The Nasdaq added 25 points, or 0.4 percent, to 6,887. The Russell 2000 index of smaller-company stocks picked up 11 points, or 0.8 percent, to 1,528. The S&P 500 and the Dow have closed at all-time highs the past two days.
FED WATCH: As expected, Federal Reserve policymakers ended their two-day meeting Wednesday by raising the federal funds rate - what banks charge each other for short-term loans - by 0.25 percentage points to a still-low range of 1.25 to 1.5 percent. The latest short-term rate increase is the third one implemented by the Fed this year and signals the central bank's confidence that the U.S. economy remains on solid footing 8½ years after the end of the Great Recession. The Fed also said it expects the job market and the economy to strengthen further next year, which is one reason it forecast that it would raise rates three times next year.
"Widely expected. No big surprises. No big changes," said Tim Dreiling, regional investment director at U.S. Bank Wealth Management. "It's encouraging that they continue to see economic growth continuing into 2018, which aligns with our thinking."
TAX DEAL: Republican leadership in the House and Senate forged an agreement Wednesday on a sweeping overhaul of the nation's tax laws. The move paves the way for final votes next week to slash taxes for businesses and give many Americans modest tax cuts starting next year. The news helped boost shares in smaller companies.
"If you look at the mix today, small caps are doing better than large caps," said Sameer Samana, global technical and equity strategist for Wells Fargo Investment Institute. "Clearly, they would be the better beneficiaries because they tend to pay higher tax rates."
HEALTHY BUMP: Health care sector stocks posted solid gains. Incyte climbed $4.02, or 4.2 percent, to $99.42.
MENDING FENCES: Western Digital rose 2.6 percent after the hard drive maker resolved a dispute with its partner Toshiba over Toshiba's plan to sell its flash memory business. Western Digital climbed $2.11 to $83.88.
APPLE TAKES A BITE: Finisar jumped 21.1 percent after Apple said it will invest $390 million in the fiber optic component supplier so it can make more lasers used in facial recognition technology. Finisar increased $4.08 to $23.38. Apple was up $1.17, or 0.7 percent, to $172.87.
DELIVERY DEAL: Target rose 2.5 percent after the retailer said it plans to boost its same-day delivery capability by paying $550 million for Shipt. The delivery service company charges members $99 a year and sends people out to choose and deliver groceries from stores. Target climbed $1.53 to $62.55.
ROSY OUTLOOK: Honeywell International rose 1.7 percent after the industrial conglomerate raised its annual profit forecast and said fourth quarter sales have been strong. The stock gained $2.67 to $156.41.
OUT THE DOOR: Diebold fell 3 percent after the ATM and security systems maker said CEO Andreas Mattes has resigned. The stock gave up 55 cents to $17.95.
FINANCIALS FLOUNDER: Banks and other financial stocks declined the most. Charles Schwab slid 91 cents, or 1.8 percent, to $50.65.
ENERGY: Oil prices veered lower, giving up early gains. Benchmark U.S. crude fell 54 cents to settle at $56.60 per barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, slid 90 cents, or 1.4 percent, to close at $62.44 per barrel in London. Wholesale gasoline fell 5 cents, or 3 percent, to $1.65 a gallon. Heating oil shed 3 cents to $1.90 a gallon. Natural gas rose 4 cents, or 1.4 percent, to $2.72 per 1,000 cubic feet.
The decline in oil prices weighed on several energy stocks. National Oilwell Varco lost 53 cents, or 1.6 percent, to $32.61.
BOND YIELDS: Bond prices rose. The yield on the 10-year Treasury fell to 2.35 percent from 2.40 percent late Tuesday.
CURRENCIES: The dollar fell to 112.55 Japanese yen from 113.58 yen late Tuesday. The euro strengthened to $1.1819 from $1.1737.
THE BITCOIN TRADE: Bitcoin futures fell $1,170, or 6.5 percent, to $16,850 on the Cboe Futures Exchange. The futures allow investors to make bets on the future price of bitcoin. The average price of an actual bitcoin was $16,515 in trading on private exchanges, according to Coindesk. The price of the digital currency has soared this year, having begun 2017 under $1,000.
METALS: Gold rose $6.90 to $1,248.60 an ounce. Silver gained 20 cents to $15.87 an ounce. Copper added 3 cents to $3.05 a pound.
MARKETS OVERSEAS: In Europe, Germany's DAX fell 0.4 percent, while France's CAC-40 slid 0.5 percent. London's FTSE 100 shed 0.1 percent. Earlier in Asia, Hong Kong's Hang Seng rose 1.5 percent, while Tokyo's Nikkei 225 shed 0.5 percent. Seoul's Kospi added 0.8 percent. Sydney's S&P-ASX 200 picked up 0.1 percent and India's Sensex added 0.4 percent.