US stocks closed higher on Wednesday, thanks to oil price gains and a less hawkish rate outlook from the Federal Reserve.
The broadest S&P500 ended up 0.56% at 2,027, while the S&P Midcap 400 closed up a healthy 1.03% a5 1,406, led by stocks such as Denbury Resources (NYSE:DNR), up 13%, Sm Energy (NYSE:SM), up 10.5% and Energen (NYSE:EGN) up 7.6%.
In the S&P Smallcap 600, which closed up 0.66% a5 661 the top scorers included Stone Energy (NYSE:SGY) which on Tuesday had led the losers in the ticker when oil prices sagged.
Oil prices surged higher, with the US benchmark West Texas Intermediate future up a hefty 6.1% at $38.56.
Another factor which helped a broad-based rally was the decision of the US central bank to leave rates on hold and scale back the number of possible rate hikes in 2016 to two from as many as four in December.
That rate news was enough to reverse a jittery and mildly negative S&P500 and push it firmly back north. Smaller cap companies, however, were little changed by the rate decision and took their cue mostly from buoyant oil prices.
Midsession
US major stock indexes enjoyed a relief rally at midsession on Wednesday as the Federal Reserve opted to leave interest rates on hold and signalled fewer for the year ahead - but smaller cap tickers were unfazed, having outperformed their larger cousins throughout the session so far.
The Federal Reserve's FOMC left its main fed funds rate unchanged at 0.5% - but signalled that another two rate hikes are in the offing in 2016. In December, when the Fed hiked rates for the first time since 2004, the expectation was for four more rate hikes in the year ahead.
Recent global strife appeared to have played a role in dousing the hawks on the Fed's panel.
The broad S&P500 index, which like the Dow Jones Industrial and the Nasdaq Composite had been soft before the rate decision, briefly turned positive and was last seen flat at 2,015.
But the smaller cap tickers were largely unchanged on their pre-Fed readings. The S&P Midcap 400 was up 0.17% at 1,394, while the S&P SmallCap 600 was up 0.15% at 557. The wider small-cap Russell 2000 also held ground, up 0.1% at 1,067.
Helping bourses gain were higher oil prices. The US benchmark West Texas Intermediate was up 4.1% at $37.82.
Open
US shares made gains ahead of the conclusion of the latest Federal Reserve meeting this evening.
Few economists expect a rise in US interest rates, but there is also an outside chance.
“The implied probability of an interest rate rise in March is only 4% but that jumps to 54% for a rate rise in June,” said Alistair McCaig at spread bet firm IG Index.
The Dow Jones Industrial Average rose 18 points to 18 points, while Nasdaq was twelve points higher at 4,741 and the S&P gained 2.5 to 2,018.
Off road vehicle specialist Caterpillar (NYSE:CAT) led the risers with a 1% gain to US$73.3, while another declaration of independence from United Technologies (NYSE:UTX) was rewarded with a small rise to US$97.14. Rival Honeywell is keen for a merger.
On the downside, Coca-cola (NYSE:KO) led the fallers. A sugar tax to be imposed by the UK may have implications for Coke going forward even if Britain is not a major market.
Coke shares fell 1.3% to US$44.64.