Nasdaq bucks trend as Apple, biotech drags
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U.S. stocks mostly closed higher Wednesday, with the Dow and the S&P 500 ending near record levels after the Federal Reserve stood pat on interest rates but referred to the U.S. economy in positive terms.
The central bank, in its statement following a two-day meeting, said economic activity has been picking up at a "solid rate," versus the "moderate" rate that it had referenced in September. The rosier view of the economy also suggests that it is on track to hike interest rates in December, as has been widely expected.
Read:Fed more upbeat on economy as it holds rates steady (http://www.marketwatch.com/story/fed-more-upbeat-on-economy-as-it-holds-rates-steady-2017-11-01)
What did stocks do?
The Dow Jones Industrial Average rose 58 points, or 0.3%, to 23,435, having hit an intraday record of 23,517.71 in early trading. The S&P 500 climbed 4 points, or 0.16%, to 2,579, and hit an intraday record of its own, at 2,588.40. Both ended mere points from record levels.
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Read:Wall Street's strong October suggests happy holidays ahead--and beyond (http://www.marketwatch.com/story/wall-streets-strong-october-suggests-happy-holidays-aheadand-beyond-2017-10-31)
Also see:Why the stock-market rally may be entering the FOMO stage (http://www.marketwatch.com/story/and-now-for-the-fomo-portion-of-the-stock-market-rally-2017-10-31)
The Nasdaq Composite Index , however, bucked the trend to slip 11 points, or 0.2%, to 6,716.5. While the tech-laden index touched an intraday record of 6,759.66 earlier in the session, it turned lower on weakness in biotechnology and large-capitalization technology stocks.
Read:Here are the top 5 worries that could spook this monster stock rally (http://www.marketwatch.com/story/here-are-the-top-5-worries-that-could-spook-this-monster-stock-rally-2017-10-31)
What's driving the markets?
With the monetary policy update out of the way, attention will now focus on who will become the next Fed chair. President Donald Trump is expected to name his pick as early as Thursday, with all indications so far pointing to current Fed Gov. Jerome Powell as the choice.
Separately, investors continue to digest the latest corporate earnings. This season has been strong thus far, with 75% of the S&P companies that have reported beating analyst estimates, according to FactSet data.
Hopes for the passage of a tax package that includes corporate tax cuts have also provided support for investing in equities. The unveiling of a House Republican tax bill was postponed a day to Thursday (http://www.marketwatch.com/story/house-gop-delays-tax-bill-plans-to-keep-top-individual-rate-of-396-2017-10-31) to give lawmakers time to iron out unresolved issues.
Check out:8 most important things to know about the GOP tax plan (http://www.marketwatch.com/story/8-most-important-things-to-know-about-the-gop-tax-plan-2017-11-01)
Outside the U.S., traders welcomed the latest Caixin China manufacturing purchasing managers index reading, which showed factory activity in the world's second-largest economy continued to expand at a steady pace in October (http://www.marketwatch.com/story/china-caixin-manufacturing-pmi-holds-steady-2017-10-31).
What are strategists saying?
"The overall tone of the Fed has been slow, steady, and supportive of economic growth. We saw more of that today. Although the economy is continuing to expand with third-quarter GDP hitting the 3% growth marker and unemployment falling to a 16-year low, inflation has been stubbornly low. This stubbornly low inflation gives the Fed cover to continue its easy policy and that remains a positive backdrop for equity prices," said Alexandra Coupe, an associate director at PAAMCO.
"The market is going up because there is no reason for it not to go up: Earnings are good, the global economic growth picture is good and there are expectations of a tax cut," said Joe Saluzzi, partner and co-head of equity trading at Themis Trading.
"The only thing that worries me is the fact that global growth is not reflected in bond yields, but that may also be due to low or negative rates elsewhere in sovereign bonds," Saluzzi said.
Which stocks are in focus?
Apple Inc.(AAPL) shares slid 1.3% after hitting records for two straight days. The iPhone maker is slated to release its quarterly results Thursday.
In another busy day on the earnings calendar, Estée Lauder Cos (http://www.marketwatch.com/story/estee-lauders-stock-rallies-after-revenue-beat-upbeat-outlook-2017-11-01).(EL) climbed 9.2% while Allergan PLC (AGN) rallied 4.2% after it reported profit and revenue ahead of Wall Street forecasts.
New York Times Co.(NYT) reported earnings above expectations thanks to increase in digital subscriptions, but shares sank 5.8%.
Shares of United States Steel Corp.(X) jumped 7.8% after the steelmaker's quarterly results and outlook out late Tuesday topped Wall Street estimates (http://www.marketwatch.com/story/us-steel-shares-rally-on-earnings-beat-outlook-2017-10-31).
Electronic Arts Inc.(EA) dropped 4.3% after the videogame maker reported a second-quarter loss (http://www.marketwatch.com/story/electronic-arts-shares-drop-in-the-extended-session-after-second-quarter-results-2017-10-31) after Tuesday's closing bell.
Envision Healthcare Corp.(EVHC) tumbled 34% after hospital company late Tuesday revealed weaker than expected earnings and said it would review strategic alternatives (http://www.marketwatch.com/story/envision-healthcare-plummets-after-earnings-miss-may-consider-sale-2017-10-31) that could include a sale.
The iShares Nasdaq Biotechnology ETF (IBB) fell 0.6% while the SPDR S&P Biotech ETF(XBI) was down 1.4%, weighing on the Nasdaq. Among the biggest movers, Momenta Pharmaceuticals Inc.(MNTA) tumbled 12.6% after it reported third-quarter results that came in below forecasts (http://www.marketwatch.com/story/momenta-shares-plunge-14-on-q3-profit-revenue-misses-2017-11-01-8912940).
Read:Tesla earnings--Model 3 production, demand under the microscope (http://www.marketwatch.com/story/tesla-earnings-model-3-production-demand-under-the-microscope-again-2017-10-25)
And see:EarningsWatch: Apple, Tesla and Facebook are post-Halloween treats (http://www.marketwatch.com/story/earningswatch-apple-tesla-and-facebook-are-post-halloween-treats-2017-10-30)
What economic data are in focus?
Private-sector employment bounced back in October as employers added 235,000 jobs (http://www.marketwatch.com/story/adp-says-235000-jobs-added-in-october-2017-11-01), ADP reported Wednesday. The data will be in view as investors look ahead to the October jobs report, which will be released Friday.
The Markit manufacturing PMI for the same month came in at 54.6. The ISM manufacturing index fell to 58.7% in October, slightly below forecasts, but still indicated robust growth.
See:Manufacturers still growing like gangbusters, ISM finds (http://www.marketwatch.com/story/manufacturers-still-growing-like-gangbusters-ism-finds-2017-11-01)
What are other markets doing?
Oil prices were lower after rallying (http://www.marketwatch.com/story/us-oil-jumps-to-2-year-high-on-signs-opec-deal-is-working-2017-11-01) on optimism that the OPEC deal to cut production is working, while gold settled higher (http://www.marketwatch.com/story/gold-on-track-to-rise-the-most-in-three-weeks-as-metals-rally-2017-11-01).
The dollar traded slightly higher (http://www.marketwatch.com/story/dollar-edges-up-as-fed-decision-comes-on-deck-2017-11-01) against other major currencies, with the ICE Dollar Index up 0.2%.
Stocks in Asia closed firmly higher (http://www.marketwatch.com/story/nikkei-kospi-jump-more-than-1-to-lead-asia-pacific-stock-gains-2017-10-31), and European markets (http://www.marketwatch.com/story/european-stocks-leap-to-2-year-high-as-commodity-shares-march-up-2017-11-01) mirrored the same mood.
--Sara Sjolin and Anora Gaudiano contributed to this article.
(END) Dow Jones Newswires
November 01, 2017 16:24 ET (20:24 GMT)