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Minyanville's Market Recap: FOMC Rally! Markets End Higher!


All eyes were watching the Fed today. Markets rallied as the Fed cut rates! Stocks end higher!

A unanimous vote by the Fed to cut rates helped the markets rally. The Dow Industrials closed up +1.00% to 13930, the S&P 500 added +1.42%, and the Nasdaq Composite added +1.51%.

Investors had plenty to digest with the day's economic events. Economic data from the Commerce Department helped set a positive tone this morning with GDP figures for the third quarter coming in at +3.9% above the Street's expectations of +3.1%. The employment cost index, which helps economists gauge shifting employment between industries and insight into benefit costs, rose +0.8% versus +0.9% consensus.

In other parts, Chicago PMI came in less than expected at 49.7 versus estimates of 53.0, and construction spending increased +0.3% versus -0.4% consensus.

Nonetheless, the deal was sealed with a unanimous 9-1 vote by the Federal Open Market Committee to cut the Fed funds and discount rate by 25 basis points to 4.5% and 5.0% respectively. Prior to the release, Toddo noted on the Buzz the first move afterward was typically the false move. After an initial sell-off stocks experienced a broad-based rally. Financials performed well with the Philadelphia Bank Index (KBW) adding +0.58%. JPMorgan (JPM) added +0.95%, Lehman Brothers (LEH) added +3.23%, and Merrill Lynch (MER) added +1.24%. Goldman Sachs (GS) led the financials briefly touching above the $250 level to settle in for a +3.16% gain. Get more insight from Toddo in his Random Thoughts.

Not all sectors received the same treatment. Homebuilders fell sharply after the release likely due to economic expansion slowing in the near term likely due to "intensification of the housing correction." Notable performances included Lennar (LEN) down -7.5%, Beazer Homes (BZH) down -6.8%, and Hovnanian (HOV) down -7.3%. For more on the housing sector read Professor Depew's Five Things You Need To Know and Professor Linden's An Underappreciated Housing Number.

In commodities news, crude oil surged to 95.01 in after-hours trading. Metals were strong as well. Gold added +7.2 to 791.50, Copper added +0.007 to 3.48145, and silver added +0.148 to 14.415. Copper was a laggard for much of the day but managed to settle up +0.007 to 3.4815.

In after hours Crocs (CROX) reported 3Q $0.66 EPS versus $0.63 consensus; revenues rose 130% to $256.3 mln versus $258.5 mln consensus. CROX stated earnings would be in the range of $1.94-1.98 versus $1.97 consensus, but revenues were expected to come in slightly lower in the range of $820-830 mln versus $835.67 consensus. CROX was trading as low as -15.50% to $60.89.

JDS Uniphase (JDSU) reported $0.08 EPS versus $0.06 consensus on revenues of $357.2 mln versus $355.8 consensus.

For more summaries click on Minyanville's Buzz Bits and Professor Tuttle's Winner's & Sinners.

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: MA, NSTK, AEZ, BLK, SCHW, NTCT, NTGR, GOOG, GS, BMY, EPAY, ARTW

Some bearish trade or investment ideas: DECK, MA, RTI, XLE, WSTK, CTIC, DXY, SLB

Trick or Treat! Happy Halloween! Have a great night!
No positions in stocks mentioned.

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.

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