Stocks Up Midday; Rate Hike Expected

(AP) -- U.S. stocks moved higher in afternoon trading Wednesday, driven by gains in industrial and health care companies. Banks lagged the most. Energy stocks also fell as the price of crude oil headed lower. Smaller company stocks notched some of the biggest gains after the GOP leadership in the House and Senate reached a deal on a tax package. Traders were also looking ahead to an afternoon announcement on interest rates from the Federal Reserve.

KEEPING SCORE: The Standard & Poor's 500 index rose 2 points, or 0.1 percent, to 2,666 as of 1:31 p.m. Eastern Time. The Dow Jones industrial average gained 95 points, or 0.4 percent, to 24,600. The Nasdaq added 12 points, or 0.2 percent, to 6,874. The Russell 2000 index of smaller-company stocks picked up 8 points, or 0.6 percent, to 1,524. The S&P 500 and the Dow have closed at all-time highs the past two days.

TAX DEAL: Republican leadership in the House and Senate forged an agreement Wednesday on a sweeping overhaul of the nation's tax laws. The move paves the way for final votes next week to slash taxes for businesses and give many Americans modest tax cuts starting next year. The news helped boost shares in smaller companies.

"If you look at the mix today, small caps are doing better than large caps," said Sameer Samana, global technical and equity strategist for Wells Fargo Investment Institute. "Clearly, they would be the better beneficiaries because they tend to pay higher tax rates."

FED WATCH: The Fed is widely expected to raise its key short-term interest rate for the third time this year as the U.S. economy strengthens. Investors appear confident that the economy can withstand a gradual increase in rates. However, they will be keeping a close eye on Fed Chair Janet Yellen's comments during a news conference for signals on how aggressive the Fed might be in raising rates next year.

"The current expectation on the part of the Fed is they will raise interest rates three times next year, but clearly one of the debates that's been ongoing is what does the low level of inflation mean for the path going forward?" Samana said.

INFLATION: New inflation data did nothing to alter expectations of another Fed rate hike. The Labor Department said Wednesday that U.S. consumer prices increased 0.4 percent last month as gasoline prices surged. Prices at the pump increased a sharp 7.3 percent after falling in October. Excluding volatile food and energy prices, so-called core consumer inflation rose a modest 0.1 percent in November.

INDUSTRIALS GAIN: Industrials sector stocks accounted for much of the market's gains. Caterpillar climbed $5, or 3.5 percent, to $148.37.

MENDING FENCES: Western Digital rose 2.3 percent after the hard drive maker resolved a dispute with its partner Toshiba over Toshiba's plan to sell its flash memory business. Western Digital climbed $1.85 to $83.62.

APPLE TAKES A BITE: Finisar jumped 29 percent after Apple said it will invest $390 million in the fiber optic component supplier so it can make more lasers used in facial recognition technology. Finisar increased $5.60 to $24.90. Apple was up 86 cents, or 0.5 percent, to $172.56.

DELIVERY DEAL: Target rose 2 percent after the retailer said it plans to boost its same-day delivery capability by paying $550 million for Shipt. The delivery service company charges members $99 a year and sends people out to choose and deliver groceries from stores. Target climbed $1.23 to $62.25.

ROSY OUTLOOK: Honeywell International rose 1.2 percent after the industrial conglomerate raised its annual profit forecast and said fourth quarter sales have been strong. The stock gained $1.92 to $155.66.

OUT THE DOOR: Diebold fell 4.1 percent after the ATM and security systems maker said CEO Andreas Mattes has resigned. The stock gave up 75 cents to $17.75.

FINANCIALS FLOUNDER: Banks and other financial stocks declined the most. Charles Schwab slid 72 cents, or 1.4 percent, to $50.84.

ENERGY: Oil prices veered lower, giving up early gains. Benchmark U.S. crude fell 31 cents to $56.83 per barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, slid 70 cents, or 1.1 percent, to $62.64 per barrel in London.

The decline in oil prices weighed on several energy stocks. National Oilwell Varco lost 50 cents, or 1.5 percent, to $32.64.

BOND YIELDS: Bond prices rose. The yield on the 10-year Treasury fell to 2.38 percent from 2.40 percent late Tuesday.

CURRENCIES: The dollar fell to 113.07 Japanese yen from 113.58 yen late Tuesday. The euro strengthened to $1.1770 from $1.1737.

THE BITCOIN TRADE: Bitcoin futures fell $1,480, or 8 percent, to $16,540 on the Cboe Futures Exchange. The futures allow investors to make bets on the future price of bitcoin. The average price of an actual bitcoin was $16,070 in trading on private exchanges, according to Coindesk. The price of the digital currency has soared this year, having begun 2017 under $1,000.

MARKETS OVERSEAS: In Europe, Germany's DAX fell 0.4 percent, while France's CAC-40 slid 0.5 percent. London's FTSE 100 shed 0.1 percent. Earlier in Asia, Hong Kong's Hang Seng rose 1.5 percent, while Tokyo's Nikkei 225 shed 0.5 percent. Seoul's Kospi added 0.8 percent. Sydney's S&P-ASX 200 picked up 0.1 percent and India's Sensex added 0.4 percent.

(BE)