US stocks hovered near record highs on Thursday as bank stocks rose, and investors viewed the Federal Reserve's interest rate outlook as a sign of confidence in the economy. The Fed sees three rate hikes next year instead of the two foreseen as of September, partly as a result of the changes anticipated under President-elect Donald Trump.
Fed Chair Janet Yellen also cited an improving labour market and evidence of faster inflation for its 2017 rate outlook. The central bank's decision to raise rates comes as Trump, who will be sworn in next month, is expected to cut taxes and boost spending on infrastructure. "Investors are buying Yellen's story that the rate hike is a vote of confidence in the economy," said Dave Donabedian, chief investment officer of Atlantic Trust in Boston.
"The economy is growing, the job market is strong and that monetary normalisation can proceed." The Dow is less than 100 points away from the 20,000 mark, while the S&P has risen more than 5 percent since Nov.8. At 11:02 am ET (1602 GMT) the Dow Jones industrial average was up 129.01 points, or 0.65 percent, at 19,921.54. The S&P 500 was up 14.61 points, or 0.64 percent, at 2,267.89. The Nasdaq Composite was up 32.70 points, or 0.6 percent, at 5,469.37.
All 11 major S&P sectors were higher, with the financial index's 1.46 percent rise leading the gainers. The index touched its highest level since Feb 2008 earlier in the day. J.P. Morgan, Wells Fargo and Bank of America were up between 1.6-2.5 percent, boosting the S&P. Dow was lifted by a 3.7 percent jump in Goldman Sachs and a 1.4 percent rise in American Express.
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