Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

T3's Take 3: Stocks Break Higher on Fed Chatter


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

Market Roundup

Stocks extended higher today as the S&P 500 traded through the high end of its recent trading range.

The index finished up 1.1% at 2102.63, exceeding the 2097 interim high set on November 20.

Traders were encouraged by possible Fed dovishness, helping equities bounce back from yesterday's decline.

The NASDAQ Composite outperformed by a tiny margin despite Apple (AAPL) giving back its early gains. High-beta momentum names like Facebook (FB) and (AMZN) charged higher, making up for Apple's weakness, as well as a slump in biotech.

The NASDAQ Biotechnology Index ETF (IBB) rose just 0.5%, significantly underperforming. If biotech was up more, the NASDAQ's relative performance would have been greater.

The Russell 2000 also displayed relative weakness with a mere 0.5% gain, finishing at 1204.16.

Financial stocks were also strong today despite lower Treasury yields and middling economic data, with the Financial Select ETF (XLF) pushing up 1.1%.

The drop in yields helped gold rally sharply on an intraday basis.

December Rate Hike?

FOMC voting member Charles Evans said today that he is nervous about the December rate hike decision. His feeling is that the Fed needs to target 2% inflation, adding that the Fed Funds rate may be under 1% by the end of 2016.

His comments kept Treasury yields going lower after a sharp drop in early trading.

Fed funds futures now show that traders are assuming a 70% probability of a December rate hike, down from 76% yesterday.

Keep in mind, FOMC Chair Janet Yellen will be speaking twice tomorrow.

Topping it all off is the November NFP report on Friday, which could tip consensus expectations regarding what the Fed will do in December.

Economic Data

A second straight day of mixed economic data also contributed to weakness in yields.

The Markit US Manufacturing PMI was 52.8, edging out the 52.8 consensus. Construction spending also beat expectations.

However, the ISM Manufacturing Index was 48.6, missing the 50.5 consensus. Readings below 50 indicate a contraction in activity.

And ISM Prices Paid was 35.5, well below the expected 40.

The Bloomberg Economic Surprise Index, which tracks economic performance relative to economists' expectations, remains near recent lows, showing no sign of pick-up.

Wednesday's Financial Outlook

Tomorrow will be a busy day for US economic data. Besides FOMC Chair Janet Yellen speaking twice, MBA mortgage applications, ADP employment, nonfarm productivity, the ISM New York, and crude oil inventory data will be released.

The Fed will also release its Beige book.

Overseas, Euro-Zone CPI and Canada's rate policy statement will be released.

Yingli Green Energy (YGE), Aeropostale (ARO), and Avago Tech (AVGO) report earnings.
No positions in stocks mentioned.
Featured Videos