US top stocks inched their way out of intraday deficit and closed at fresh record highs on Wednesday after Federal Reserve meeting minutes were released.
The S&P 500 closed up 0.8% at 2204.72 – a record high - the S&P Midcap 400 advanced 0.4% to 1635.57 – shy of its intraday record high of 1635.77 - and the S&P Smallcap 600 rose 0.6% to 821.67, just shy of its intraday record high of 821.82.
The minutes of the November meeting – held just days before the US presidential election - have since been overtaken by more bold statements from Fed officials pointing to a hike as early as mid December. So to that end they were historical and at best supportive of what markets think will happen to rates. The market fully prices in a hike in December.
Meanwhile oil prices ended flat – despite EIA data showing that crude oil stockpiles fell last week when a further glut was expected and Iraq vowed to cut oil output and anointed next week’s OPEC planned supply curbs.
The wider small-cap Russell 2000 closed up 0.6% at 1342.33, just off a record high of 1342.35.
Conversely, across the northern border at Toronto’s TSX Composite, the ticker forgot multi-month highs of the past two sessions and ended 0.1% lower at 15,080.
Early trading
US stocks were mixed on Wednesday, as the S&P 500 fell while the Dow Jones Industrial Average gained even as oil prices gained on news that Iraq was to cut output while US stockpiles surprisingly fell last week.
The S&P 500 was down 0.14% at 2199 and led by pharma Eli Lilly and Company (NYSE:LLY) down 12.6% at $66.45 after the company said its Alzheimer’s drug had failed in a large clinical trial.
Many analysts and investors had been expecting the medicine, Solanezumab, to show efficacy in patients suffering from mild dementia due to the disease, after previous trials showed it slowed the disease by roughly a third in early-stage patients.
The top riser was farming machinery manufacturer Deere & Co (NYSE:DE) whose shares hit a record high of $101.96, and the highest level since mid 2011.
Before the bell, the company reported market-beating fourth-quarter results and offered a bullish outlook for 2017.
Deere shares were last seen up 9.4% at $100.70.
The S&P Midcap 400 was up 0.07% at 1629 and led by Gamestop Corp (NYSE:GME), up 5.7% at $25.48 after its third quarter earnings beat forecasts but sales missed.
The S&P Smallcap 600 was up 0.2% at 818 and led by Caleres Inc (NYSE:CAL) after the footwear maker announced third quarter earnings overnight.
Perhaps what is more surprising is that oil stocks didn’t appear at the top of any of these indices despite oil prices snapping 0.25% higher to $48.15 after Iraq’s prime minister said the OPEC producer was willing cut some of its own production, smoothing the way to a supply deal when the 14-member cartel meets in Vienna next week.
In more oil price-positive news, US crude oil stocks fell last week after three straight weeks of builds as imports dropped and refineries hiked output, while gasoline inventories rose sharply amid weak demand, US Energy Information Administration data showed.
Crude inventories fell 1.3mln barrels in the week to Nov. 18, compared with expectations for an increase of 671,000 barrels.
Pre-Open
US stocks look set to open lower on Wednesday as they draw breath following a succession of record high closes in the past few sessions.
On Tuesday the S&P 500, Dow Jones Industrial Average and Nasdaq Composite all chalked up record highs.
The ongoing euphoria over business-friendly US President-elect Donald Trump looks set to continue, as the Dow Jones Industrial Average looked set to open firmer even if the market bellwether S&P 500 was looking at a 0.2% decline.
Buttressing declines, however, the latest US durable goods data jumped sharply and can’t be bad for business either.
But some stocks could be about to mark historic highs of their own.
Farming machinery manufacturer Deere & Co (NYSE:DE) shares are expected to open at a historic high after the stock soared by 11.1% to $102.48 pre-market. That would surpass the previous record high of $99.80 struck in the second quarter of 2011.
Before the bell, the company reported market-beating fourth-quarter results and offered a bullish outlook for 2017.
The Moline, IL-based company reported Q4 net income of $0.90 per share, which was a massive $0.51 better than the $0.39 that analysts had expected. Revenues fell 4.8% from last year to $5.65 billion, also beating Wall Street’s $5.36bn estimate.
Deere noted that a global farm recession and weak construction equipment markets were the culprits behind its fourth quarter and full year sales declines.
In data, October durable goods orders jumped 4.8% month-on-month versus a tamer forecast of 1.5% growth, and reinforces the case for at least a 25 basis points US interest rate hike on Dec. 14.
Initial weekly jobless claims were also in the ballpark, at 251,000. Economists expected 250,000 claims.
The Fed will be on the radar for investors at 1400 ET (1900 GMT) when the central bank releases minutes from its October policy-setting meeting.
Economists and traders will be looking for more hints that a December interest rate hike is in the cards. Yellen said last week that the Fed could raise interest rates "relatively soon." Some commentators noted the ambivalence of that statement as Yellen keeps markets guessing. A rate hike is priced in more than 100% by Federal funds futures.
Shares of Eli Lilly And Co (NYSE:LLY) will be centre stage after the pharma said its Alzheimer’s drug had failed in a large clinical trial.
Many analysts and investors had been expecting the medicine, Solanezumab, to show efficacy in patients suffering from mild dementia due to the disease, after previous trials showed it slowed the disease by roughly a third in early-stage patients.
The drugmaker’s stock was down 13.4% at $65.84 pre-market.
Oil was also likely to be on the radar after EIA publishes official US crude oil inventories at 1030 ET (1530 GMT) and natural gas stocks at 1200 ET (1900 GMT).
Despite a rally earlier in the week on hopes OPEC will hammer out its planned supply curbs agreement at the end of the month, the US oil benchmark West Texas Intermediate was down 0.9% to $47.59.