Market Recap: Another FOMC Surprise
The FOMC had another surprise in store.
Prior to the opening bell, stocks received a large boost after the Fed announced a joint effort by the world's central banks. S&P futures jumped to +2.09%, or 30 points this morning as the Federal Reserve announced that it would provide up to $24 bln available to the European Central Bank and Swiss National Bank to increase the supply of dollars in Europe. The Fed also planned four actions, including two this month, to add as much as $40 bln in an effort to increase liquidity in the U.S. For more, Read Professor Depew's Five Things You Need To Know. Also read Profesor Greg Weldon's FOMC Questions and Answers.
The actions sparked numerous commentaries here at the 'Ville with many professors skeptical of the plan. Mr. Practical said "the plan… has relatively small numbers attached to it. It is basically an emotional ploy to cajole the markets. It has no substantial difference from banks that currently can borrow at the discount window in scope."
Minyan Andreas warned readers of the move as well, "This morning's global coordinated action by central banks to accept virtually any collateral makes them the de facto Lenders of last Resort. To my mind there is no other LoLR. If this action fails --- it fails hard."
Although the sentiment gradually faded away with the Dow Industrials slipping as much as 100 points into the red late in the trading session, last minute buyers stepped in to bring stocks back into positive territory. Technology shares performed well. Research in Motion (RIMM) added +2.71%, Apple (AAPL) added +1.5%, Cisco (CSCO) +3.2%, and Baidu (BIDU) finished +2.9%.
Financials stocks ended mixed even though they started the morning very strong. The Philadelphia Bank Index (BKX) fell -1.78%. Wachovia (WB) fell -3.3%. Fannie Mae (FNM) and Freddie Mac (FRE) fell -6.3% and -2.8% respectively. Bank of America (BAC) shares fell -2.7% after the stated quarterly results were disappointing and warned that further writedowns were "unknowable." For more, read Toddo's Random Thoughts.
In commodities, crude oil surged after weekly crude inventories showed a draw of 722,000 barrels. Crude settled +3.68 to 93.70. Professor Adam Michael mentioned a false break down on the Buzz last week and added that we may see $100 by New Year's. For more of the longer term secular themes regarding the price of crude, read his article written earlier this week, Trends Affecting Oil Price.
Gold futures added +1.70 to 818.80, silver lost -0.04 to 14.82, and copper fell -5.40 to 303.60.
For more summaries, click on Minyanville's Buzz Bits.
Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.
Some bullish trade or investment ideas: MCHP, PKX, AKAM, FRPT, AATI, OSPS, JAVA, PBR, SU, NTDOY, DIS, C, AXP, RVBD, LAZ, LEH, BZP, TXCO, CCI, BTU
Some bearish trade or investment ideas: BAC, SIGM, MA, HBC, BKX, IFN
Y'all have a great night now! See ya in the mornin'.
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