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Stocks Make Considerable Gains on Fed's Patience

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

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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.

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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