The big correction of the last two days has momentarily begun to reverse as the Dow gained 72 points on news that the private sector added 49,000 more jobs than expected and Boeing beat its full-year profits forecast.  There is still fear of inflation from Fed statements confirming further gradual rate hikes, though this month anyway, no action was taken.  And for a second day, the healthcare sector took another big hit, this time 1.5%, which added to yesterday’s 2.1% drop makes a two-day total decline of 3.6 percent.  Yes, higher rates means more inflation and a cooling of equities but it has been the goal for a couple years now to do just that as inflation is so low and equities so hot to begin with.  Also today the forecast for Q4 earnings growth has been raised to 13.7% from 13.2 yesterday and 12 a few weeks ago.  Volume is still roaring at 8 billion. 

wed  JANUARY 31, 2018 / 5:38 pM

Wall St. ends off day's highs as Fed sees inflation rising

Stephen Culp

DJ: 26,149.39  +72.50        NAS:  7,411.48  +9.00          S&P:  2,823.81  +1.38       1/31

(Reuters) - U.S. stocks finished marginally higher on Wednesday as indexes gave up early gains after the Federal Reserve said it sees inflation rising this year, signaling it remains on track to boost interest rates again in March.  The Fed kept rates unchanged but, in a statement following its two-day policy meeting, it repeated that it expected that “further gradual” rate hikes will be warranted. 

“The subtle message is that they will continue to press rates higher,” said Scott Kimball, director and portfolio manager at BMO Global Asset Management.  The central bank raised rates three times last year and sees three additional hikes in 2018 even as it continues to trim its balance sheet on a largely pre-set schedule.  “They’re more confident in their expectations of rising inflation,” said Kevin Logan, Chief U.S. Economist at HSBC Securities. 

Bolstering the Fed’s view of a solid economy, ADP published a report on Wednesday showing 234,000 private sector jobs added in January compared with 185,000 expected by analysts. The U.S. Labor Department is due to release its more comprehensive report on Friday.

The Dow Jones Industrial Average .DJI rose 72.50 points, or 0.28 percent, to 26,149.39, the S&P 500 .SPX gained 1.38 points, or 0.05 percent, to 2,823.81 and the Nasdaq Composite .IXICadded 9.00 points, or 0.12 percent, to 7,411.48. 

Stocks were lifted earlier Wednesday by a surge in Boeing (BA.N) which forecast better-than-expected full-year profits and said it expects to deliver a record number of commercial aircraft in 2018, sending its shares up 4.9 percent.  The aerospace giant was the biggest percentage gainer on the Dow, helping pull the blue-chip index out of its biggest two-day plunge since September 2016. 

The selloff earlier in the week had been prompted by an increase in U.S. Treasury yields to multi-year highs. The U.S. yield curve flattened to a decade low following the Fed statement as traders sold more short-dated Treasuries.

Facebook (FB.O) shares dipped more than 4 percent in after-market trading after the social media giant reported results.  Among the S&P 500’s 11 major sectors, technology .SPLRCT gave the biggest boost to the index. 

Healthcare stocks continued to weigh on the three major U.S. indexes following a report on Tuesday that Amazon.com (AMZN.O), Berkshire Hathaway (BRKa.N) and JPMorgan Chase (JPM.N) were joining forces to cut healthcare costs for its U.S. employees. The S&P 500 healthcare index .SPXHC fell 1.5 percent. 

Analysts expect fourth-quarter S&P 500 earnings growth of 13.7 percent, up from 12 percent expected at the startof the month. So far, 37 percent of companies in the index have reported and 80.5 percent have come in above consensus estimates.  Advancing issues outnumbered declining ones on the NYSE by a 1.14-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.  The S&P 500 posted 34 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 82 new highs and 48 new lows. 

Volume on U.S. exchanges was 8.05 billion shares, above the 7.18 billion average for the full session over the last 20 trading days.