Friends
Stocks had quite a roller coaster ride today as traders seemed to spend the day chasing oil prices and junk bonds. As we mentioned on Friday, the collapse in oil prices is putting huge stress on the high yield “junk” bond market, as debt of energy companies does represent a measurable amount of that sector of the bond market.
As I said, stocks gyrated all day long, at times rocketing higher and within seconds falling deeply into negative territory. That craziness did subside some in the afternoon, and stocks climbed higher. By the close, the Dow Jones Industrial Average was up 103 points to finish the day at 17,368. The S&P 500 was up 9 points to close at 2022. Gold was down $11 to trade at $1064 per ounce, while oil finally bounced after being down earlier and traded up $.64 to finish the day at $36.26.
Remember, this is Fed week with the FOMC meeting scheduled to begin tomorrow and then on Wednesday we’ll get the announcement and statement. It seems that every time we come to a Fed meeting something in the market place is causing heartburn. This time, Chair Yellen and company are faced with a distressed high yield bond market, plunging commodity prices and a weakening economy. Will they stick to the script and raise the Fed Funds rate a quarter of a point on Wednesday? It seems likely that they still will, but as usual, the marketplace is making their decision just a bit more difficult.
Have a nice evening everyone.
