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Stocks Make Considerable Gains on Fed's Patience


Today's financial recap and tomorrow's financial outlook.

US equity markets and other risk assets reacted positively to the FOMC's statement and press conference today.
The Fed complemented its "considerable time" language by saying it would be "patient" in its approach to raising interest rates, with inflation being an important factor. The Fed also lowered its Fed Funds rate projections for 2015-2017, and reduced its unemployment rate forecasts.

While the Fed noted in its press release that its approach was consistent with its October statement, traders decided to extend the relief rally regardless.

In recent days, sentiment indicators like the ISEE Index and the NYSE McClellan Oscillator flashed readings similar to those seen at the October bottom, setting the stage for a rebound in risk assets.

The S&P 500 traded as high as 2016.75 following the Fed announcement, and finished at 2012.88, up 2.0% on the day.

We saw similar reactions in energy stocks and MLPs as well as high-yield bond ETFs, which led the way up today. These assets were hit particularly hard in recent weeks while oil prices were melting down.

Small caps also did quite well as the Russell 2000 (RUT) rose 3.1% to 1174.83.

Emerging markets also shined in a bit of a relief rally, spurred on by a rebound in Russia ruble, which had been crushed in recent days.

As such, Treasury yields pulled back from recent lows as money flowed into aforementioned beaten-down high-yield market.

On the data front, November CPI fell 0.3%, the largest drop since December 2008, which was near the height of the financial crisis. Gasoline prices were a major factor in the decline.

In earnings news, shipper Fedex (FDX) fell 3.7% to $167.78 after its second-quarter results missed analysts' expectations.

Tomorrow's Financial Outlook

Jobless claims will be reported at 8:30 a.m. ET, followed by the Philly Fed Index and Leading Economic Indicators at 10:00 a.m. We'll also receive earnings reports from Accenture (ACN), Rite Aid (RAD), and Nike (NKE).

However, the action in oil prices and Russia are equally likely to have an impact on trading as swings in those markets have tended to drive risk appetites.

Twitter: @Minyanville

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No positions in stocks mentioned.

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