Stocks close higher as Street hopes Comey testimony to be less damaging to Trump than feared
U.S. equities closed higher on Wednesday as investors hoped the testimony from former FBI chief James Comey will be less damaging to President Donald Trump than previously feared.
The Dow Jones industrial average rose about 35 points, with Boeing and UnitedHealth contributing the most gains. The S&P 500 advanced 0.15 percent as financials led advancers, but a more than 1 percent drop in energy stocks capped gains.
West Texas Intermediate futures for July delivery shed 5.13 percent to settle at $45.72 a barrel after the Energy Information Administration reported a surprise build in crude inventories.
The Nasdaq composite outperformed, gaining 0.36 percent.
The Senate Intelligence Committee released Comey’s full opening remarks Wednesday afternoon, at which time the major indexes traded back near session highs.
In the written statement, Comey said he understood Trump to be asking him to “drop” the probe into Flynn when they spoke in February. “[Trump] then said, ‘I hope you can see your way clear to letting this go, to letting Flynn go. He is a good guy. I hope you can let this go,'” Comey will say of an Oval Office meeting in February.
“I would say everything is pretty benign here,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “The fact that we’re rising here implies that the market was looking for something more damning.”
Comey is slated to testify in front of the committee on Thursday and answer questions, marking the first time he publically speaks since being fired from his post.
Trump abruptly fired Comey last month. While Comey was FBI chief, Trump allegedly asked Comey to ease off on a probe into Michael Flynn, the former national security advisor.
The Washington Post reported Tuesday night that Trump asked his top intelligence official to get Comey to back off on Flynn’s investigation.
“We’ll get a lot of theater for sure, but the market has been able to look through the noise,” said Mark Spellman, portfolio manager at Alpine Funds. “Unless we get Comey suggesting the president participated in a criminal activity, the market will look beyond that.”
The stock market has mostly traded sideways this week as investors hold off on making big bets ahead of Comey’s testimony.
Maris Ogg, president of Tower Bridge Advisors, said she does not expect a smoking gun to come up with the testimony. “I think that if he indicts Trump, he indicts himself,” Ogg said. “After that, I think you have to go back to the underlying fundamentals, which have been good.”
Equities hit all-time highs recently as Wall Street remained undeterred by most news coming out of Washington. Some investors also believe there is still the possibility that the Trump administration will pass pro-growth policies like tax reform sometime this year.
Nevertheless, traditional safe havens have appreciated in value recently. The benchmark 10-year note yield hit its lowest level since November 10 on Tuesday and gold prices hovered near a seven-month high.
“It’s difficult to reconcile the tepid message from many of the macro barometers with the strength in equities, and we’re certainly mindful of this backdrop as the market’s weaker seasonal period approaches,” Chris Verrone, head of technical analysis at Strategas Research Partners, said in a note Wednesday.
Wall Street also looked ahead to a general election in the United Kingdom, with Prime Minister Theresa May’s Conservative Party expected to win. However, recent opinion polls show the Conservative’s lead narrowing.
Elsewhere, the European Central Bank is set to release its latest monetary policy decision on Thursday. While interest rates are expected to remain unchanged, the central bank may cut its inflation forecasts.
The euro traded 0.2 percent lower against the dollar at $1.1254. The dollar index, which tracks the U.S. currency’s performance against six major currencies, traded 0.13 percent higher at 96.75.
“Clearly, you’ve got the trifecta of events tomorrow and traders seem to be mostly sitting on their hands,” said Ryan Detrick, senior market strategist at LPL Financial, referring to Comey’s testimony, the ECB announcement and the UK election. “You also have a few events next week with the Federal Reserve meeting.”
The Dow Jones industrial average rose 37.46 points, or 0.18 percent, to close at 21,173.69, with Nike leading advancers and Coca-Cola lagging.
The S&P 500 gained 3.81 points, or 0.16 percent, to end at 2,433.14, with financials leading eight sectors higher and energy lagging.
The Nasdaq advanced 22.32 points, or 0.36 percent, to close at 6,297.38.
Decliners were a step ahead of advancers at the New York Stock Exchange, with an exchange volume of 883.86 million and a composite volume of 3.562 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 10.4.
Thursday
Earnings: Dell Technologies, JM Smucker, Vail Resorts, Verifone, Cloudera
7:45 a.m. European Central Bank rate decision
8:30 a.m. News conference with ECB President Mario Draghi
8:30 a.m. Initial claims
10:00 a.m. QSS
Friday
Earnings: Ferrellgas Partners
10:00 a.m. Wholesale trade
Source: CNBC
