Reply #66: all over but the blathering [View All]

[ozymandius]

Dow 13,504.30 Up 35.52 (0.26%)
Nasdaq 2,561.60 Up 14.27 (0.56%)
S&P 500 1,476.71 Up 9.04 (0.62%)
10-Yr Bond 4.743% Up 0.012
NYSE Volume 613,631,000
Nasdaq Volume 2,833,202,000

4:20 pm : Not surprising during a Fed day, especially under current market conditions, investors endured another roller coaster ride. The Dow swung more than 257 points intraday while the S&P 500 and Nasdaq traded in a 2.2-2.3% range. In the end, though, the major indices closed in positive territory following what was another volatile last hour of trading.

Per usual, all eyes were anxiously fixed on today's FOMC meeting; and, as expected, policy makers left rates unchanged at 5.25% for a ninth straight time. What wasn't a foregone conclusion, though, was whether the Fed would acknowledge the credit risks that have roiled financial markets of late.

Initially, a statement that showed far less concern about the credit and economic outlook than the financial markets had hoped prompted a knee-jerk reaction in equities and dropped the indices to session lows. A reiteration of the Fed's tightening bias and a mention that "downside risks to growth have increased somewhat" were also viewed in a negative light and further support our neutral Market View.

Nonetheless, even though the market was overly optimistic about the Fed coming to Wall Street's rescue, policy makers actually acknowledging the tightening credit conditions was eventually viewed as a net positive, especially for the battered Financial sector.

The latter got its initial lift from another short-covering rally in the Thrifts & Mortgage group while Goldman Sachs (GS 191.25 +3.46), one of the five large investment banks Moody's Investors Service said it does not plan to downgrade, denied talk that it was liquidating its Global Alpha hedge fund.

Brokerage stocks also got a lift amid reports that Bear Stearns' (BSC 117.20 +3.39) CEO has been calling other Wall Street executives to reassure them about the firm's financial health.

After being down 1.3% intraday amid concerns oil was still technically overbought following Monday's 4.5% plunge, crude rallied into the close to put an even stronger bid in an Energy sector that has lost about half of its value over the last three weeks. Crude for September delivery rose 0.5% to $72.42/bbl amid refinery disruptions and ahead of another expected build in weekly gas supplies.

Technology, which was in focus ahead of a Q4 report from Cisco Systems (CSCO 29.69 +0.19), was the only sector failing to participate in today's follow-through efforts. The sector's biggest blemish was Qualcomm (QCOM 40.50 -1.27), which lost its patent battle with Broadcom (BRCM 32.76 -0.68). DJ30 +35.52 NASDAQ +14.27 SP500 +9.04 NASDAQ Dec/Adv/Vol 1321/1742/2.65 bln NYSE Dec/Adv/Vol 1437/1873/2.09 bln