Stocks rise with Dow near 20,000; dollar steady before Fed

Tue Dec 13, 2016 4:47pm EST
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By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks extended their recent rally while the dollar held steady on Tuesday ahead of the U.S. Federal Reserve's expected interest rate hike and potential changes in its inflation and growth outlook.

All three major U.S. stock indexes hit record closing highs and the Dow ended fewer than 100 points from the 20,000 mark. It breached 19,000 only last month in the post-U.S. election move up. Gains in technology and energy companies boosted U.S. stocks on Tuesday.

Uncertainty over whether the Fed would signal a slow or fast pace of rate increases following its meeting kept the dollar steady against a basket of currencies.

The Fed on Wednesday is widely expected to hike interest rates for the first time since last December and only the second since the 2007-2009 financial crisis, but investors will be examining the central bank's statement and economic forecasts for any signs of how policymakers think President-elect Donald Trump's election affects the outlook for growth and inflation.

The question is, "how much can their forecast change. In reality, the forecast can't change that much because the data hasn't changed that much," said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. Yet, "the stock market is pricing in a big uptick in growth next year.

"Tomorrow what will be key is how the market digests that forecast."

The U.S. stock market's rally has been driven largely by hopes of better U.S. economic growth under President-elect Donald Trump. The Dow has climbed about 9 percent since the election.

The Dow Jones industrial average was up 114.78 points, or 0.58 percent, to 19,911.21, the S&P 500 gained 14.76 points, or 0.653977 percent, to 2,271.72 and the Nasdaq Composite added 51.29 points, or 0.95 percent, to 5,463.83.   Continued...

A trader watches his screen on floor of the New York Stock Exchange (NYSE) shortly before the close of trading in New York, U.S., December 13, 2016.  REUTERS/Lucas Jackson