Friends
Before the Fed statement which was released at 1:00 our time, stocks were just biding time, basically straddling the breakeven line. But the statement, which was a bit more bullish/hawkish than we have seen, seemed to reinforce the notion that interest rate increases would be forthcoming possibly sooner than traders had recently come to believe. That QE was now coming to an end was of no surprise, but the bulls seemed a little nervous that the Fed might not be their friend as long as they would like. The question should be, if the Fed sees a better economy, then why would traders need accommodation as a safety net? Anyway, stocks dropped about 100 Dow points by 2:00 but spent the last hour recovering some of those losses.
By the close, the Dow Jones Industrial Average was down 31 points to finish the day at 16,974. The S&P 500 was down 2 points to close at 1982. Gold was down $18 to trade at $1211 per ounce, while oil was up $.75 to trade at $82.17 per barrel WTI.
Is the Fed getting ahead of itself? Are things really getting that much better? Recent economic data both at home and abroad may argue that things are not getting better. Yes, the labor situation is better, but … Anyway, if the Fed is correct then the ending of QE and coming rise of interest rates are appropriate actions.
Regardless, the bulls decided to back off a bit, yet the bears can’t really find that much to celebrate in the statement either. Let’s see how the rest of the week plays out, and whether traders return their focus to earnings.
Have a nice evening everyone.
