* Fed sees three rate hikes in 2017
* Banks lead gainers, boost major indexes
* Dow less than 100 points away from 20,000
* Yahoo falls after data breach raises concerns over Verizon
* Indexes up: Dow 0.55 pct, S&P 0.55 pct, Nasdaq 0.62 pct
(Updates to early afternoon)
By Tanya Agrawal
Dec 15 U.S. stocks were off their highs but
continued to hover near record levels on Thursday as investors
viewed the Federal Reserve's interest rate outlook as a sign of
confidence in the economy.
The Fed sees three rate hikes next year instead of the two
foreseen as of September, partly as a result of the changes
anticipated under President-elect Donald Trump.
Fed Chair Janet Yellen also cited an improving labor market
and evidence of faster inflation for its 2017 rate outlook.
The central bank's decision to raise rates comes as Trump,
who will be sworn in next month, is expected to cut taxes and
boost spending on infrastructure.
"Investors are buying Yellen's story that the rate hike is a
vote of confidence in the economy," said Dave Donabedian, chief
investment officer of Atlantic Trust in Boston.
"The economy is growing, the job market is strong and that
monetary normalization can proceed."
Since the U.S. presidential election, stocks have rallied on
bets that Trump's business friendly proposals will stimulate the
The Dow is less than 100 points shy of the 20,000 mark,
while the S&P has risen more than 5 percent since Nov.8.
Still, there are some concerns that the rally has gone too
far too soon and that valuations are slightly stretched.
"The recent rally is based on sentiment and
'back-of-the-envelope' calculations regarding how the tax reform
will help companies. The reforms haven't happened as yet," said
At 12:57 p.m. ET (1757 GMT) the Dow Jones Industrial average
was up 107.92 points, or 0.55 percent, at 19,900.45.
The S&P 500 was up 12.5 points, or 0.55 percent, at
The Nasdaq Composite was up 33.83 points, or 0.62
percent, at 5,470.50.
Ten of the 11 major S&P sectors were higher, with the
financial index's 1.40 percent rise leading the gainers.
The index touched its highest level since Feb 2008 earlier in
JPMorgan, Wells Fargo and Bank of America
were up between 1.5-2.5 percent, boosting the S&P.
Dow was lifted by a 4.3 percent jump in Goldman Sachs
Economic data on Thursday showed U.S. consumer prices
moderated in November, but the underlying trend continued to
point to firming inflation pressures.
Yahoo fell 4.8 percent to $38.95 after the
technology company disclosed a second massive data breach that
raised fears Verizon might kill a deal to buy its core
internet business. Verizon was up 0.7 percent at $52.02.
Advancing issues outnumbered decliners on the NYSE by 1,792
to 1,146. On the Nasdaq, 1,786 issues rose and 1,012 fell.
The S&P 500 index showed 37 new 52-week highs and no new
lows, while the Nasdaq recorded 138 new highs and 39 new lows.
(Reporting by Tanya Agrawal in Bengaluru; Editing by Anil