May 21st 2014 – All Smiles on Wall Street As Fed Signals No Rate Hike Soon

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Market View:

No shocks from the Fed then, and with fed forward guidance still being painted in a positive manner backed by some strength in the labour markets we may yet see a new all time high again in the S&P.  Possibly this week.

Good news from Russia as Putin elected to withdraw his troops from the Ukranian Border ahead of the election in the country.  Hopefull stability will come out of those elections and democracy will win through as lead to peace.

I expect some short term weakness tomorrow after such a gangbuster of a day, but just a pause as the trend is still bullish.  And the trend is our friend.

Market News:

U.S. stocks jumped on Wednesday, bouncing back from the prior day’s sharp fall, after minutes from the Federal Reserve’s last meeting had central bankers discussing ways to normalize interest rates.

“The conversation is clearly shifting from this unprecedented accommodation to policy firming. For equity markets, this is a positive signal, because the economic momentum is more upbeat, but at the same time tightening is not imminent,” said Anastasia Amoroso, a Houston-based global market strategist at J.P. Morgan Funds.

The central bank last month trimmed its monthly asset buying to $45 billion, its fourth consecutive $10 billion reduction. Fed officials also said the economy was picking up steam and the labor market improving.

Tiffany climbed after the high-end jeweler posted quarterly profit that topped expectations; Netflix gained after saying it would broaden its online-video offerings in Europe. Target gained after the discount retailer reported a 0.3 percent decline in U.S. same-store sales, better than the 1.1 percent drop expected by analysts polled by Consensus Metrix. Lorillard rallied after Reuters reported Reynolds American was in advanced talks to acquire the cigarette company.

Also rebounding after its recent battering, the Russell 2000 climbed 0.6 percent, but the gauge of small companies still remained roughly 9 percent from its all-time high.

Benchmark indices spiked to session highs in the immediate aftermath of the Fed release.

The Dow Jones Industrial Average leaped as much as 170 points, and ended up 158.75 points, or 1 percent, to 16,533.06, with Goldman Sachs Group leading gains that included 28 of its 30 components.

The S&P 500 added 15.20 points, or 0.8 percent, to 1,888.03, with consumer discretionary and energy pacing gains in a broad market surge that included all of its 10 major industry groups.

The Nasdaq climbed 34.65 points, or 0.9 percent, to 4,131.54.

Lower interest rates pushed mortgage applications to refinance higher by 4 percent last week from the week before, but failed to bring potential home buyers into the market, according to data released by the Mortgage Bankers Association.

European stocks closed slightly higher, with Italian shares up more than 1%.

Asian marked ended the day mixed, with Thailand’s SET up around 0.6%. The Thai military announced the imposition of martial law, but this morning said that it would hold meetings with opposition leaders.

THURSDAY: Jobless claims, Chicago Fed nat’l activity index, PMI mfg index flash, existing home sales, leading indicators, Kansas City Fed mfg index, Fed’s Williams speaks, Facebook annual mtg, Intel shareholder mtg; Earnings from Best Buy, Dollar Tree, Hewlett-Packard, Gap, Marvel Tech, Ross Stores, Aeropostale, Gamestop, TiVo

News Sources:  CNBC and CNN Money

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