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CAT, Apple Drive Dow; Nasdaq Gets Traction Ahead Of Fed | Stock News & Stock Market Analysis

Stocks opened higher Wednesday, with tech stocks taking an early lead ahead of this afternoon’s Federal Reserve announcement.

XThe Dow Jones industrial average opened up 0.1%, with Caterpillar (CAT) up 1.3% and Apple (AAPL) taking a 0.9% gain.

The Nasdaq Composite jumped 0.4%, bolstered by strong early moves from Western Digital (WDC) and NetEase (NTES).

The S&P 500 climbed 0.2%, with Western Digital, CenturyLink (CTL) and Dentsply Sirona (XRAY) chalking up the strongest gains.

The focal point for Wednesday’s action is likely to be the announcement of the Federal Open Market Committee’s rate policy decision at 2 p.m. Markets fully expect a rate hike, with CME Group’s FedWatch showing a 90.2% probability of a quarter-point hike and a 9.8% chance of a half-point hike. The larger question is how many additional rate increases Fed policymakers deem necessary for 2018, a projection that is seen largely as a referendum on the GOP’s tax reform package.

Consumer prices rose 0.4% in November, the Labor Department estimated, upshifting from a 0.1% increase in October and meeting economists’ consensus projections. Core prices, without energy or food, rose 0.1%, down from October’s 0.2% advance and also in line with expectations.

The Energy Information Administration reports weekly oil inventories at 10:30 a.m. ET.

Disney, Fox Near Deal; Apple Backs Finisar; Verifone Guides Low

Caterpillar powered up 2%, with an eye toward reversing a mild, two-day pullback. Shares remained in a buy range Tuesday, above a 140.54 buy point in a flat base. Barclays initiated coverage on the stock with an overweight rating.

Walt Disney dipped 0.2%, while 21st Century Fox sank more than 2%, two days after Comcast (CMCSA) retracted its bid for Fox’s TV and movie studio assets. That left Disney as the sole bidder in what some expect to be a $60 billion deal. News reports said the two companies plan to announce an agreement on Thursday. Disney shares climbed back above support this week, almost 12% above a September low and working their way up the right side of a possible eight-month base pattern.

Fox shares were up 8% from a 31.02 buy point in a cup-with-handle base at the end of Tuesday’s session.

Fiber optic gear maker Finisar (FNSR) opened 26% higher, on reports that Appl had awarded the Sunnyvale, Calif., company $390 million out of its $1 billion Advanced Manufacturing Fund. The funds will enable Finisar to convert its dormant 700,000-square-foot plant in Sherman, Texas, into a production facility for VCSEL semiconductors, or vertical cavity surface emitting laser chips.

VCSEL competitor Lumentum (LITE) slumped 11% in early action.

Western Digital surged nearly 4% at the open, after Summit Redstone Partners upgraded the stock to buy, from hold. Western settled a joint venture agreement dispute with Toshiba on Tuesday. The deal cleared Tohiba’s path to the sale of its flash-memory unit to a group led by Bain Capital, which includes Apple and Dell Technologies (DVMT).

Western Digital shares are below key support levels in a five-month consolidation.

Verifone Systems (PAY) sunk 7% after meeting fiscal fourth-quarter performance expectations, but delivering first-quarter and full-year guidance below consensus views. The point-of-sale systems maker also announced a $100 million share buyback initiative. The stock was testing resistance at the end of Tuesday’s session, attempting to climb the right side of a three month consolidation.

Grupo Supervielle (SUPV) led the IBD 50 list, up 2% at of the open. The stock is extended after a November rebound from support at its 10-week moving average.


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