http://www.msn.com/en-us/money/markets/dow-closes-within-100-points-of-20000-ahead-of-fed-rate-decision/ar-AAluGB8?li=BBmkt5R&ocid=spartandhpDow closes within 100 points of 20,000 ahead of Fed rate decision 12/13/16
Stocks closed higher Tuesday as investors kept an eye on a key Federal Reserve meeting, while the Dow Jones industrial average closed in on another milestone.
The Dow closed up 114 points at a record 19,911, with IBM and Apple contributing the most gains. The S&P 500 also ended at an all-time high, rising 0.65 percent, with energy and information technology leading advancers. The Nasdaq outperformed, advancing 0.95 percent to a new all-time high.
The Fed began a two-day monetary policy meeting, with most market participants expecting the central bank to raise interest rates by 25 basis points. According to the CME Group's FedWatch tool, market expectations for a rate hike were above 90 percent.
"To me, it's all about what they say about their guidance for 2017," said Eric Stein, co-director of global income at Eaton Vance. "I don't expect them to be particularly hawkish tomorrow," but we could see a more hawkish Fed in the near future.
"A new political regime took hold on November 8th and tomorrow we'll see if there is any acknowledgement of that from the FOMC and whether we're about to embark on a new monetary regime. I would define 'new monetary regime' as anything more aggressive than the pace of one rate hike per year," said Peter Boockvar, a chief market analyst at The Lindsey Group, in a note.
The meeting is expected to conclude Wednesday, with Fed Chair Janet Yellen scheduled to hold a news conference at 2:30 p.m. ET.
U.S. Treasury yields were mixed on Tuesday, with the benchmark 10-year yield trading around 2.48 percent, a day after breaking above 2.5 percent for the first time since 2014. The two-year note yield rose, last trading around 1.17 percent. Yields have risen sharply since the election, as investors have dumped Treasurys as optimism surrounding possible tax cuts and deregulation of certain sectors has made other assets more attractive.
"Everyone is looking at the 20K level which is very important because there could be some profit taking at that level. This is a major resistance and psychological mark and traders will not hesitate to take some profit off the table to celebrate another bull year," Naeem Aslam, chief market analyst at Think Markets, said in a note.
The Dow has gained 14 percent for the year, with a large part of those gains coming after Donald Trump stunned the world by winning the U.S. presidency. Since Nov. 8, the Dow has spiked more than 8 percent and has posted 16 record closes.
"What we've seen in the past months is what some might call a new phase of the bull market," said Rick Anderson, chief investment officer at Hull Investments, noting that stocks have risen along with the dollar and interest rates over the past month. The U.S. dollar held around the flatline against a basket of currencies on Tuesday, but has surged 3.2 percent since the election.
Still, Bill Northey, chief investment officer at the Private Client Group at U.S. Bank, said the Dow hitting 20,000 might just be a psychological event for the market, as the number "is not an important technical event and it is not indicative of where we go from there."
In economic news, the November read on the NFIB Small Business index came in at 98.4, above October's 94.9. Meanwhile, import prices fell 0.3 percent in November.
Overseas, European equities traded higher, with the pan-European Stoxx 600 index rising 1.06 percent. In Asia, stocks closed mixed as the Shanghai composite advanced just 0.08 percent and the Nikkei 225 rose 0.5 percent.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.
U.S. crude futures for January delivery rose 0.3 percent to settle at $52.98 per barrel.