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Small Caps And Dow Advance; Fed Decision Awaited | Stock News & Stock Market Analysis

U.S. stock indexes shrugged off a Republican political loss in Alabama, as stocks rose Wednesday in advance of the Federal Reserve’s decision on interest rates.

X The Nasdaq and the Dow Jones industrial average advanced 0.4% and 0.6%, respectively, while the S&P 500 added 0.3%. The small-cap Russell 2000 led with a 0.7% gain.

Volume in the stock market today was running a bit higher on the NYSE and a little lower on the Nasdaq vs. the same time Tuesday.

The Federal Reserve will wrap up its two-day meeting at 2 p.m. ET. Analysts expect the Fed will raise rates a quarter-point. If that happens, attention will naturally shift to how many rate hikes the Fed expects in 2018.

Meanwhile, Republican Roy Moore suffered an upset in the race for the U.S. Senate, losing to Democrat Doug Jones. President Trump had endorsed Moore. This will reduce the Republican lead in the Senate to 51 seats. The stock market treated the upset as a nonevent. The tax-cut bill gained Senate approval in early December by a 51-49 vote, and The Associated Press reported Wednesday that congressional negotiators had agreed in principle on a final bill.

Day’s Leaders

Among IBD’s 197 industry groups, the leaders at midsession included construction and mining equipment, metal-handling machinery, and chip-equipment makers.

In the construction-mining space, Manitowoc (MTW) rose 2.5% in roughly average volume. The crane maker is working on an ascending base that holds a 42.22 buy point. Manitowoc is a turnaround story. The small-cap company lost money in 2015-16 and is expected to turn in a loss of 17 cents a share in 2017. Analysts expect a profit of 56 cents a share in 2018.

In the same group, big cap Caterpillar (CAT) popped 3.5% in heavy volume. The stock is now extended from a 140.54 buy point. The buy zone is capped at 147.56.

Custom parts maker Proto Labs (PRLB), which is in the metal-handling group, rose 2.5% to a 52-week high. Volume was 23% above average. Proto Labs also is a turnaround story. Earnings fell 8% in 2016, but the Street expects 17% growth this year and 19% in 2018. The 2018 growth would be the best since 2013.

In the chip-equipment group, which has fallen from No. 4 among 197 groups to No. 31 in the past three weeks, Ichor (ICHR) advanced 2% in quiet volume. The stock is just above its 200-day line. Earnings are expected to rise 84% this year and 37% in the coming year.

Blue Chips

Blue chips were mostly up. In the 30-component Dow Jones industrial average, Caterpillar’s 2.5% gain led the upside, while IBM (IBM) led the laggards with a 1.3% drop. IBM peaked 10 months ago and then slid 24% in six months. The stock is now about 11% off the low. Big Blue is trying to regain its 200-day moving average.

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