Bonds, Stocks Rally in Response to Larry Summers Withdrawal
Today's financial recap and tomorrow's financial outlook.
Much of the news flow centered around the letter from former Treasury Secretary Larry Summers in which he withdrew his candidacy for the Fed chairman. Summers was viewed as more hawkish than the other leading candidates Janet Yellen and Donald Kohn. This led to anxiety among many fixed income investors over his potential deviation from current Fed policy. Summers cited the potentially acrimonious confirmation process in the Senate that would be damaging to the integrity of the Federal Reserve, President Obama, and the American people.
The market's response to the news included a rally in gold, Treasuries, and equities, and a sell-off in crude oil. The Treasury curve steepened significantly, indicating that interest rates will likely remain near zero for a longer period of time. Gold staged a number of short-lived rallies throughout the day, but eventually finished near unchanged.
Equities opened up more than 1%, but failed to hold onto those gains as the day progressed. Apple (NASDAQ:AAPL) fell almost 4% in the day's trading, dragging the Nasdaq-100 (INDEXNASDAQ:NDX) down 0.34%. Other tech laggards included Facebook (NASDAQ:FB), Altera (NASDAQ:ALTR), and Vertex Pharmaceuticals (NASDAQ:VRTX).
JPMorgan (NYSE:JPM) announced that it would agree to at least $750 million in fines associated with its London Whale credit derivative trades.
Tomorrow's Financial Outlook
Economic data set to be released tomorrow morning includes August's consumer price index, July foreign Treasury flows, and the NAHB's September builder sentiment. August consumer prices are estimated to have risen 1.6% from a year ago. "Core" prices, ex-food and energy costs, are estimated to have risen 1.8%. Last week, producer wholesale prices rose 1.4% from a year ago, down from a 2.1% rate the month prior.
The NAHB's survey is expected to remain at an index reading of 59, unchanged from the month prior. New home sales contracted 13.9% to a 394K annual rate last month.
The UK is scheduled to release its producer and consumer price indexes overnight. Economists expect that UK consumer prices rose 2.7% from a year ago and producer prices rose 1.8%.
The only earnings report on the calendar tomorrow is from Adobe (NASDAQ:ADBE).
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.