THURSDAY, DECEMBER 18, 2014...
U.S. stocks surged on Wednesday, with the Dow marking its best session of the year, as investors celebrated a rally in the energy sector and the Federal Reserve's pledge to be patient in raising interest rates, after the Federal Reserve retained the phrase "considerable time" in its policy statement, and also introduced another word, "patient," as the central bank readies to raise interest rates next year.
The subtle change in wording could be a "compromise between keeping it in there and pulling it out completely, or that's my reading of the tea leaves," said Tom Kersting, principal and fixed income investment strategist for Edward Jones. "The Fed will continue to be supportive of the economy, which is ultimately good for equity markets, at least in the short term. Longer term, equities are driven by earnings growth, and an economy that continues to improve will help earnings growth," Kersting said.
Addressing a televised news conference, Fed Chair Janet Yellen said the new language was not a change in policy, and that a rate increase was unlikely for the next several meetings. "The equity markets are celebrating this as less hawkish than anticipated," said Art Hogan, chief market strategist at Wunderlich Securities. "If we walked in today concerned about anything other than the price of a barrel of oil and Russia imploding, it was a more hawkish Fed statement, and that didn't happen," Hogan added.
Energy producers led Wall Street gains, and the price of oil turned higher. "West Texas has stabilized a bit here. Maybe that's enough to stop the precipitous decline in oil shares, as that sector was completely washed out," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
After a 320-point jump, the Dow Jones Industrial Average rose 288 points, or 1.7 percent, to 17,356.87, with Chevron leading gains that included all 30 components. The S&P 500 added 40.15 points, or 2 percent, to 2,012.89, with energy pacing gains among its 10 major sectors, all of which advanced. The Nasdaq gained 96.48 points, or 2.1 percent, to 4,644.31. For every share falling, nearly seven rose on the New York Stock Exchange, where 583 million shares traded as of 2:40 p.m. Eastern. Composite volume neared 3.3 billion.
On the New York Mercantile Exchange, West Texas Intermediate for January delivery closed 54 cents higher at $56.47 a barrel. Gold futures for February added 20 cents to $1,194.50 an ounce.