Typically, investors go into hibernation mode the day prior to and up until the Fed’s Federal Open Market Committee announcement, but that wasn’t the case on Tuesday as investors traded with little concern, prior to what is expected to be a 0.25 percent rate increase in the overnight lending rate when the Fed concludes its meeting Wednesday. Investors will be looking for cues from the Fed’s comments regarding how many rate increases to expect in 2017, with current expectations now between two or three.
The major market averages finished higher on Tuesday with the Dow Jones Industrial Average closing at 19,911.21. Some in the financial media are becoming giddy over the idea that the Dow is just a stone’s throw away from crossing the 20,000-point threshold. All the major market averages finished the day in the green with the Standard & Poor’s 500 up 0.65 percent and the Nasdaq Composite higher by 0.95 percent over the same period.
Market milestones are a funny thing, on one hand they help reinforce investors beliefs that stock markets are moving higher, a call to some that they are missing the train if they are currently out of the market. While for others, they may increase fears that stock prices are too high, triggering sentiments that it’s now time to sell. The media play a part in making these milestones out to be bigger than they should be. I mean, where was the celebration on Tuesday when the S&P 100 index closed above 1,000 by four points for the first time in history? It’s at times like these that we must remind ourselves that it’s only a number, it just happens to have more zeros in it than others.
Investors seem to be a little less concerned that interest rates are headed much higher in the short term, given a boost to dividend paying stocks. This week’s top performing sectors were led by the Dow Jones U.S. Utilities index up 4.62 percent over the past five trading days. In the No. 2 spot this week is the Dow Jones U.S. Technology index gaining 3.81 percent over the same period.