Stocks were higher today bouncing back from yesterdays Fed related selloff. The Dow gained 59 points on lower volume to close at 19,852 while the NASDAQ gained 20 points on heavier volume to close at 5,456. Bank and financial stocks were big movers on the Dow while healthcare related stocks led the NASDAQ.
The Federal Reserve Board increased interest rates a quarter point yesterday and banks are responding by moving prime lending rates higher. The Fed also indicated that 2017 will see more interest rate hikes than previously indicated sending the US dollar up and gold lower. Overall the message from Janet Yellen was that the Fed remains accommodative but is increasingly positive regarding the economy, hiring and business conditions.
One unusual thing occurring in markets is the rise in utility stocks. Normally utility stocks fall during a rising interest rate environment but just the opposite seems to be happening since the election. I have looked for some reasons behind this and while I have not read anything definitive in the news it is possible that the new administration could curtail EPA regulations and FERC rules which affect utility company operations. Someone I talked to at a rural electric coop in Montana said proposed regs for smart meters and wind energy mandates have the potential to drive the cost per KWH from six cents to a buck which would kill energy demand and boost sales of wood burning stoves. Maybe utility stocks are higher because investors see a more balanced and cooperative approach to energy and the environment.