U.S. stocks closed higher on Wednesday, with consumer discretionary and materials leading, as investors digested the Federal Reserve's December meeting minutes.
The Dow Jones industrial average added about 60 points, with IBM contributing the most gains, putting it within 100 points of 20,000. The Nasdaq composite advanced about 0.9 percent.
The S&P 500 gained around 0.6 percent and briefly broke above its previous closing high, with consumer discretionary and materials rising more than 1 percent. "That shows that people are bottom-fishing," said Kim Forrest, senior equity analyst at Fort Pitt Capital. "Those retail stocks have gotten way oversold recently."
The minutes showed the central bank is concerned about a strengthening dollar, and that more fiscal stimulus could raise demand above sustainable levels. Investors were looking for clues about what the central bank thought of President-elect Donald Trump's proposed fiscal policy measures. The Fed raised rates at its last meeting for just the second time in a decade and forecast three rate hikes for 2017.
"To some extent, [the minutes] reinforce the positive notion that we'll see more growth," said Bruce McCain, chief investment strategist at Key Private Bank. "That's the glass-half-full view the market seems to be taking."
Equities have rallied significantly since Trump's win, amid the prospects of fiscal stimulus and tax cuts. Rob Lutts, chief investment officer at Cabot Wealth Management, said he believes the U.S. bull market can continue under Trump. "Maybe we're on the sixth or seventh inning," he said. "I think President-elect Trump is extending that."
That said, Mike Bailey, director of research at FBB Capital Partners, said "I do think there are some stocks with rising execution risk," meaning that certain stocks could fall if Trump does not deliver.
Mortgage applications tanked 12 percent for last week, from two weeks earlier as rising interest rates weighed.
Meanwhile, Fiat Chrysler, Ford Motor and General Motors all reported better-than-expected auto sales for December, sending their stocks higher. U.S. auto sales for December came in much stronger than expected, with a pace of 18.4 million, versus an estimate of 17.7 million.
"You add that with yesterday's ISM manufacturing number, which was the best in a few years, and you've got a case for strong economic growth, not just domestically but globally," said Bruce Bittles, chief investment strategist at Baird.
Investors also kept an eye on the U.S. dollar, which pulled back from its highest levels in 14 years. The greenback traded 0.6 percent lower against a basket of currencies, with the euro near $1.048 and the around 117.3.
Lukman Otunuga, research analyst at FXTM, said in a note that "dollar strength may become the new norm this quarter as the combination of repeatedly positive economic data and prospects of higher US rates attract investors to the currency."
"With the Trump effect still fuelling the bull rally and optimism rising over fiscal stimulus boosting US economic growth, the Dollar may be destined to be a champion amongst other major currencies once again," he said.
U.S. Treasurys rose after the Fed minutes were released, with the benchmark 10-year yield at 2.435 percent, while the short-term two-year note yield slipped to 1.222 percent. Yields had traded higher earlier in the session.
The Dow Jones industrial average rose 60.4 points, or 0.3 percent, to close at 19,942.16, with Pfizer leading advancers and ExxonMobil the biggest decliner.
The gained 12.92 points, or 0.57 percent, to end at 2,270.75, with materials leading nine sectors higher and telecommunications and energy declining.
The Nasdaq composite advanced 47.92 points, or 0.88 percent, to close at 5,477.
About five stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 932.03 million and a composite volume of 3.691 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.8.
On tap this week:
8:15 a.m. ADP employment
8:30 a.m. Initial claims
9:45 a.m. Services PMI
10 a.m. ISM nonmanufacturing
8:30 a.m. Employment
8:30 a.m. International trade
10 a.m. Factory orders
11:15 a.m. Chicago Fed President Charles Evans
1:00 p.m. Richmond Fed President Jeffrey Lacker
3:30 p.m. Dallas Fed President Robert Kaplan
11:15 a.m. Federal Reserve Governor Jerome Powell at AEA annual meeting
11:15 a.m. Minneapolis Fed President Neel Kashkari at AEA