Investing.com – Wall Street rallied to a record close for the sixth-straight session buoyed by a surge in financials as the Federal Open Market Committee got its two-day meeting underway on Tuesday.
The Dow Jones Industrial Average closed higher at 22375.20. The S&P 500 closed 0.11% higher while the Nasdaq Composite gained 0.10%.
Financials, mostly banks, strong start to the week continued to push the major averages higher amid expectations that the Federal Reserve will reaffirm its outlook that an additional rate hike remains appropriate this year, when it concludes its two-meeting policy meeting on Wednesday.
JPMorgan Chase & Co (NYSE:JPM), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) closed more 0.5% higher.
Higher interest rates are seen as boon for banks, boosting net interest margin – the difference between the interest income generated by banks and the amount of interest paid out to their lenders.
Some analysts remained uncertain, however, as to how markets will react should the Fed announce that it will begin to unwind its $4.5tn balance sheet.
“Any reduction in the Fed balance sheet will be gradual and it is happening on the backdrop of improving economy in the U.S. and globally. But at the same time, we don’t know how the market will react because we have never had this situation before,” Karyn Cavanaugh, senior market strategist at Voya Financial.
The rally in U.S. stocks shrugged off data showing weakness in the housing sector and a fresh threat from Donald Trump to North Korea which did little to raise geopolitical uncertainty.
"If [the US] is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea," President Donald Trump said.
The Commerce Department said Tuesday U.S. homebuilding fell 0.8% to a seasonally adjusted annual rate of 1.18 million units in August, well below economists’ estimates of a 1.7% rise.
The report also highlighted a sharp 5.7% rise in building permits to a rate of 1.3 million units. That was the highest level since January, beating forecasts of a 0.8% decline.
'Bulls and Bears' on Wall Street
The top Dow gainers for the session: Verizon Communications Inc (NYSE:VZ) up 2.6%, American Express Company (NYSE:AXP) up 1.3% and JPMorgan Chase & Co (NYSE:JPM) up 1.1%
UnitedHealth Group Incorporated (NYSE:UNH) down 1.8%, General Electric Company (NYSE:GE) down 1.1% and Nike Inc (NYSE:NKE) down 0.3%, were among the worst Dow performers of the session.