NEW YORK — U.S. stocks are rising Wednesday afternoon after the Federal Reserve raised interest rates, as investors had expected. The central bank said the U.S. economy and the job market continued to improve in the last two months.
Energy companies are rising along with the price of oil for the second day in a row and smaller, more U.S.-focused firms are climbing. Technology and industrial stocks are also rising. Those companies tend to do better in times of faster economic growth. Homebuilders are up following a report that sales increased in February. Cereal maker General Mills is sinking after it reported rising expenses and cut its profit forecast.
KEEPING SCORE: The S&P 500 index rose 10 points, or 0.4 percent, to 2,727 as of 2:35 p.m. Eastern time. The Dow Jones industrial average rose 157 points, or 0.6 percent, to 24,885. The Nasdaq composite added 13 points, or 0.2 percent, to 7,377. The Russell 2000 index of smaller companies gained 13 points, or 0.9 percent, to 1,584.
FED WATCH: The Federal Reserve raised interest rates again. It did so three times last year, and one of the key debates on Wall Street is whether the Fed will wind up increasing rates four times this year instead of three. Investors will be watching for new Fed Chairman Jerome Powell’s comments at a press conference Wednesday afternoon.
Bond prices edged lower. The yield on the 10-year Treasury note rose to 2.93 percent after it jumped to 2.90 percent Tuesday.
THE QUOTE: David Kelly, the chief global strategist for JPMorgan Asset Management, said stocks usually do well when interest rates are rising, but only up to a point.
“If interest rates are rising from a low level, there’s more optimism about the economy, and that generally is a more positive thing,” he said. That’s the case right now, but with an important difference: interest rates have been historically low for about a decade. Because the economy has adjusted to those low rates, he said the Fed should stop raising rates after this year.
Kelly added that the Fed and the government need to be careful to focus on smooth growth, as the recent tax cuts will dump some short-lived stimulus into the economy.
“The overall effect of the tax cut is to deliver another keg to a keg party at 2 a.m.,” he said. “The party is probably going to go a little longer but the hangover is going to be worse.”
COMMODITIES: Benchmark U.S. crude rose $1.63, or 2.6 percent, to $65.17 a barrel in New York. Brent crude, used to price international oils, added $1.21, or 3.1 percent, to $69.57 a barrel in London.
Wholesale gasoline added 5 cents to $2.01 a gallon. Heating oil rose 5 cents to $2 a gallon. Natural gas fell 4 cents to $2.64 per 1,000 cubic feet.
Metals prices also increased. Gold rose $9.60, or 0.7 percent, to $1,321.50 an ounce and silver jumped 23 cents, or 1.4 percent, to $16.42 an ounce. Copper gained 2 cents to $3.06 a pound.
SPILLED MILK: General Mills, the maker of Cheerios cereal, Yoplait yogurt and other packaged foods, plunged after its third-quarter results were hurt by rising freight and commodity costs. The company also cut its annual profit outlook. The stock dropped $4.83, or 9.7 percent, to $45.10.
Other packaged food companies also fell hard. Kellogg sank $2.65, or 4 percent, to $63.67 and J.M. Smucker lost $5.12, or 4.1 percent, to $120.31.
RE-FRIENDED: After early losses, Facebook rose $2.15, or 1.3 percent, to $170.30. The stock fell 9 percent Monday and Tuesday following reports a data mining firm working for President Donald Trump’s campaign took data from the accounts of 50 million Facebook users without their permission. Authorities in Britain and the U.S. launched investigations into Facebook’s handling of user data.
Facebook stock is down 12 percent from the all-time high it set Feb. 1.
Social media companies Twitter and Snap also regained a portion of their recent losses. They dropped this week as investors worried about the possibility of additional investigations and federal regulation. Adding to Snap’s woes, its stock fell last week after pop star Rihanna called on her fans to delete the Snapchat app after an ad for game that made jokes about her assault in 2009 by her then-boyfriend Chris Brown. Snap apologized for the ad.
GROUNDED: Airlines skidded after Southwest said its revenue is suffering as it cuts fares to compete with other companies. Southwest also said the retirement of some Boeing 737-300 planes and the timing of spring break holidays is affecting its business. Southwest dropped $3.03, or 5 percent, to $57.66 and American Airlines fell $1.12, or 2 percent, to $54.20.
CURRENCIES: The dollar fell to 106.22 yen from 106.46 yen. The euro rose to $1.2289 from $1.2253.
OVERSEAS: The CAC 40 in France declined 0.2 percent and Britain’s FTSE 100 fell 0.3 percent. Germany’s DAX finished with a small gain.
Hong Kong’s Hang Seng index erased earlier gains to fall 0.4 percent and South Korea’s Kospi finished little changed. Markets in Japan were closed for a holiday.
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AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP . His work can be found at https://apnews.com/search/marley%20jay
