Friends
Stocks were firmly in positive territory midday, just waiting for the Fed minutes to be released. Then all hell broke loose. At first glance the Fed minutes appeared somewhat dovish, and indeed they are. The minutes indicate that the members were not overly concerned about inflation yet were encouraged by growth. Well, that sounds like a perfect scenario and indeed stocks skyrocketed to a 300 point gain in the Dow. But then realization seemed to seep in that things have changed some since the meeting 3 weeks ago. We’ve had inflation numbers that were hotter than expected and a budget deal that could also stimulate inflation. Eventually bonds began to sell off (rates rise) and stocks quickly followed, under the realization that the Fed’s view might be somewhat more hawkish today than weeks ago.
By the close, the Dow Jones Industrial Average was down 166 points to close at 24,797. The S&P 500 was down 14 points to close at 2,701. Gold was down $6 to trade at $1,325 per ounce, while oil was down $.70 to trade at $61.09 per barrel WTI.
After a week where we saw stocks have a steady advance, we are now giving back some of those gains. We’ve stated that another test of the recent lows might be better in the long run for stocks than just racing back to new highs. Maybe we are heading back to test those lows. Let’s see how the rest of the week unfolds.
Have a nice evening everyone.
