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Russell 2000, Biotech Index Make New Record Highs on Fed's Patience


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


US economic data was disappointing across the board today.

Housing starts, building permits, PPI, Industrial production, capacity utilization, and manufacturing production all missed economists' expectations.

However, the market traded largely sideways into the 2:00 p.m. release of the January FOMC Meeting Minutes.

While some market participants have been forecasting rate hikes for as early as June, the Fed made one thing clear: higher rates are not necessarily on the way.

In its statement, the Fed expressed concern about "the risks associated with an early start to policy normalization, and said that "many participants observed  that a premature increase in rates might damp the apparent solid recovery in real activity and labor market conditions, undermining progress toward the committee's objectives."

The Fed reported participants' concerns about the impact of the strong US dollar on net exports, and it also called out the slowdown in China, global disinflationary pressures, tensions in the Middle East and Ukraine, as well as Greece.

The US dollar and Treasury Yields fell while gold rose sharply. The drop in rates boosted utility stocks, which have been underperforming as of late, while it hit financial stocks.

As a whole, equity markets firmed up on the release, and the S&P 500 recovered its earlier losses to finish at 2099.68, down just a fraction of a point.

The real hero, however, was the Russell 2000, which hit a new all-time intraday high at 1227.98.

And for the second straight day, even though the broader action was middling, there were pockets of strength in high-beta sectors, notably in biotech. In fact, like the Russell 2000, the NASDAQ Biotechnology Index hit a new all-time high.

Greece remained bit of a question mark, as news reports indicated that Greece would submit a loan request to keep it afloat while avoiding austerity measures. Germany opposed the measures.

In the afternoon, the Wall Street Journal reported that the ECB approved a request to lend  €68.3 billion to Greek banks through an emergency credit facility.

Needless to say, Greece remains extremely fluid.

Tomorrow's Financial Outlook

Thursday will be another busy day, starting with Wal-Mart's (WMT) earnings report, which will be released before the open.

Jobless claims will be released at 8:30 a.m. ET, followed by the Philly Fed Index and Leading Economic Indicators at at 10:00 a.m.

Additionally, natural gas and crude oil inventories will be released at 10:30 and 11:00 a.m., respectively.

Overseas, Japan will release its monthly economic report for February.

And as always, news out of Greece could influence the market action.

Twitter: @Minyanville

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No positions in stocks mentioned.

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