Stocks Take Tiny Steps; Trim Of Dodd-Frank Clears Senate Panel | Stock News & Stock Market Analysis

U.S. stocks were little changed in midday action Wednesday, despite President Trump’s disruptive plan regarding Jerusalem and a Senate committee’s backing of a partial rollback in Dodd-Frank.

X The Nasdaq crept 0.1% higher, while the S&P 500 was just barely above flat. The blue chip Dow Jones industrial average added 0.1%, while the small cap Russell 2000 fell 0.1%.

Volume in the stock market today was below the previous session’s pace.

Trump is expected to announce that the U.S. is recognizing Jerusalem as Israel’s capital. This would make the U.S. the first country to do so. The U.S. would then eventually move its embassy from Tel Aviv to Jerusalem.

Dodd-Frank Rollback

On a quieter note, the U.S. Senate Banking Committee approved a bipartisan rollback to parts of the Dodd-Frank law in a 16-7 vote Tuesday. Four Democrats on the panel voted with the majority. The rollback has the support of nine Democrats in the Senate, and initial support from Federal Reserve chief Janet Yellen and Yellen’s replacement Jerome Powell.

The bipartisan legislation doesn’t involve a full repeal.

The bill would raise the trigger for more intense regulation of financial firms from the current $50 billion in assets to $250 billion, thus easing the regulatory burden on smaller financial institutions. This would benefit firms such as Charles Schwab (SCHW), which rose five sessions in a row before pulling back Tuesday and so far Wednesday; SunTrust Banks (STI), which rose six sessions in a row before its pullback; and American Express (AXP), which advanced six sessions in a row, going into Wednesday’s session.

Major money centers such as Wells Fargo (WFC), Bank of America (BAC) and JPMorgan Chase (JPM) would not get a break. At midday, all three were down slightly.

Bank stocks, including the big players, have benefited on the belief that the Federal Reserve will crank interest rates at least a quarter point after the Fed meets Dec. 12-13. CME Group’s FedWatch Tool estimates the odds of a rate hike at 100%. The only difference is between those who expect a quarter-point hike (90.2%) and those who see a half-point increase (9.8%).

A half-point increase would be a bold move, and the Ben Bernanke/Janet Yellen Fed isn’t known for boldness.

Chips Shift Sideways

In recent sessions, the chipmakers, chip designers and chip-equipment makers have fallen 9% to 14% off their highs. As of Tuesday’s close, the chip sector fell to No. 8 among 33 sectors — its worst ranking of the year.

Speculation among market watchers swirls around two views: Either chip stocks will offer a buying opportunity when they stop falling and rebound or their leadership position will be turned over to some other sector such as banks and financials.

Among IBD’s 197 industry groups, solar and steel producers led the upside. Oil-related stocks led the downside.

Economic Optimism

The IBD/TIPP Economic Optimism Index, a gauge of consumer confidence, decreased in December. The overall reading dropped to 51.9 from 53.6 in November.

“It’s worth noting that the tax reform package President Trump championed and is nearing passage hasn’t led to a jump in optimism,” said Terry Jones, IBD’s commentary editor.

Despite the drop in December, the optimism gauge remains in positive territory. The index has held above the neutral level of 50 for 15 months in a row.


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Originally posted 2017-12-10 23:06:29.


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