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T3's Take 3: All Signs Point to a December Rate Hike, and Mr. Market Likes It


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

A Rate Hike Is Coming

Today, we had the release of the FOMC Minutes, plus hawkish chatter from Fed officials.

Fed heads Bill Dudley, Dennis Lockhart, and Loretta Mester all spoke this morning and suggested in one way or another that a December rate hike is on the way. Lockhart said he was ready to raise rates in September.

Once the minutes came out at 2 p.m. ET, the headlines echoed most of was heard earlier. Most Fed officials said liftoff conditions would be met by December, and that overseas risk as minimal. 

It is worth mentioning that since the FOMC meeting last month, strong jobs and inflation numbers have been released, supporting the case for a rate hike.

As of this afternoon, Fed funds are pricing in a 66% probability of a December rate hike. 

Market Roundup

The markets continued climbing today, with an additional momentum boost after the release of the Fed minutes.

The S&P 500 finished the day at 2083.58, up 1.6%. That puts it less than 4% away from the 2134.72 all-time high.

The Financial Sector (XLF) got a huge boost from the FOMC minutes, as higher interest rates would boost bank profit margins.

XLF rose 1.8% today, with Citigroup (C) up 2.8% and JP Morgan (JPM) rising 2.0%

The Nasdaq 100 (QQQ) rose 1.9%, led by strength in biotechnology and Apple (AAPL).

Apple was added to Goldman Sachs' (GS) Conviction Buy List, giving it a 3.2% boost.

Crude oil rose fractionally today, while the US dollar and Treasury yields rose in response to the Fed Minutes.

GoPro Goes Down

Fallen momentum icon GoPro (GPRO) fell 5.1% to $19.81 today, a new record low cose.

Piper Jaffray cut its target price in GoPro to $15 from $20. Piper said that GoPro cameras have seen pricing pressure on (AMZN), and that they are appearing on flash sales sites like Groupon (GRPN).

As a result, Piper is concerned about GoPro's positioning going into the holiday season. 

GoPro shares are now down 69% year-to-date. However, Wall Street remains relatively optimistic on the stock.

63% of covering analysts rate GoPro a Buy, and the average target price is $38.93.

Thursday's Financial Outlook

Tomorrow morning, Jobless Claims, the Philly Fed, and Leading Index reports will be released.

Overseas, we can look forward to British Retail Sales and Canadian Wholesale Sales.

In earnings, Best Buy (BBY), Sears Hldg (SHLD), Autodesk (ADSK), and Intuit (INTU) report their numbers tomorrow.
No positions in stocks mentioned.
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