Wall Street Takes FOMC Announcement in Stride
20-Sep-17 16:30 ET
Dow +41.79 at 22412.59, Nasdaq -5.28 at 6456.04, S&P +1.59 at 2508.24
[BRIEFING.COM] The stock market settled at a new record high once again on Wednesday, but the victory was far from convincing and looked improbable after the latest FOMC policy directive prompted a mild sell off. Both the Dow and the S&P 500 finished at new all-time highs, adding 0.2% and 0.1%, respectively. However, the tech-heavy Nasdaq slipped 0.1% as technology stocks struggled.
As expected, the FOMC unanimously voted to keep the fed funds target range at 1.00%-1.25% and announced that it will begin unwinding its balance sheet in October. Meanwhile, the Fed's so-called "dot plot" was unchanged from the one released in June, showing that the median FOMC member anticipates an additional rate hike in 2017 and three rate hikes in 2018.
The feds funds futures market now places the chances of a December rate hike at 67.8%, up from 57.7% on Tuesday and from 48.7% last week.
U.S. Treasuries were trading flat ahead of the FOMC announcement, but then moved lower in a curve-flattening trade. The 2-yr yield, which is more sensitive to changes in monetary policy, jumped five basis points to 1.44%, finishing at a nine-year high. Meanwhile, the benchmark 10-yr yield climbed four basis points to 2.28%.
The U.S. Dollar Index (92.25, +0.63) settled with a gain of 0.7% after holding a loss of 0.2% prior to the FOMC release.
In the equity market, the two heaviest sectors--technology (-0.5%) and financials (+0.6%)--finished at opposite ends of the leaderboard. Apple (AAPL 156.07, -2.66) weighed on the tech space, dropping 1.7%, following rumors of softer-than-expected demand for the new iPhone 8, which was unveiled last week.
Elsewhere within the tech space, chipmakers underperformed, sending the PHLX Semiconductor Index (-1.4%) lower for the first time in eight sessions. Adobe Systems (ADBE 149.96, -6.64) also exhibited notable weakness (-4.2%), despite reporting above-consensus earnings and revenues.
As for financials, the space got off to a mild start, but moved sharply higher following the FOMC policy announcement. Financials' win--which marks the eighth in the last nine sessions--was a team effort as nearly all of the sector's components finished in positive territory.
The energy sector (+0.7%) also outperformed, thanks in part to an increase in the price of crude oil; WTI crude jumped 1.5% to $50.70/bbl. The EIA's weekly crude inventory report was disappointing, showing a bigger-than-expected build of 4.6 million barrels (+3.5 million consensus).
However, the Iraqi oil minister said OPEC and non-OPEC producers are considering extending, or even deepening, last year's supply-cut agreement, which is currently set to expire in March 2018. That news helped the commodity overcome the EIA inventory report and climb to its highest level in four months.
It's also worth noting that transports outperformed on Wednesday, pushing the Dow Jones Transportation Average higher by 1.6%. FedEx (FDX 220.50, +4.50) was one of the DJTA's strongest components (+2.1%), despite issuing below-consensus guidance on Tuesday evening.
In politics, reports indicate that Senate Majority Leader Mitch McConnell (R-KY) intends to put a new health care bill on the floor next week. In order to avoid an overlap with the vote, reports indicate that Congress may delay releasing a tax reform outline until the first week of October.
Reviewing Wednesday's economic data, which included August Existing Home Sales and the weekly MBA Mortgage Applications Index:
Existing home sales for August decreased 1.7% from July to an annualized rate of 5.35 million units while the Briefing.com consensus expected a reading of 5.42 million. The prior month's reading was left unrevised at 5.44 million.
The key takeaway from the report is that notable supply constraints remain, which will continue to act as a drag on overall sales due to the limited inventory and the high prices on available inventory that is crimping affordability.
The weekly MBA Mortgage Applications Index decreased 9.7% to follow last week's 9.9% rise.
On Thursday, investors will receive several economic reports, including the weekly Initial Claims Report (Briefing.com consensus 310K) at 8:30 ET, the September Philadelphia Fed Index (Briefing.com consensus 17.1) also at 8:30 ET, and the July FHFA Housing Price Index at 9:00 ET.
Nasdaq Composite +19.9% YTD
S&P 500 +12.0% YTD
Dow Jones Industrial Average +13.4% YTD
Russell 2000 +6.5% YTD
20-Sep-17 16:30 ET
Dow +41.79 at 22412.59, Nasdaq -5.28 at 6456.04, S&P +1.59 at 2508.24
[BRIEFING.COM] The stock market settled at a new record high once again on Wednesday, but the victory was far from convincing and looked improbable after the latest FOMC policy directive prompted a mild sell off. Both the Dow and the S&P 500 finished at new all-time highs, adding 0.2% and 0.1%, respectively. However, the tech-heavy Nasdaq slipped 0.1% as technology stocks struggled.
As expected, the FOMC unanimously voted to keep the fed funds target range at 1.00%-1.25% and announced that it will begin unwinding its balance sheet in October. Meanwhile, the Fed's so-called "dot plot" was unchanged from the one released in June, showing that the median FOMC member anticipates an additional rate hike in 2017 and three rate hikes in 2018.
The feds funds futures market now places the chances of a December rate hike at 67.8%, up from 57.7% on Tuesday and from 48.7% last week.
U.S. Treasuries were trading flat ahead of the FOMC announcement, but then moved lower in a curve-flattening trade. The 2-yr yield, which is more sensitive to changes in monetary policy, jumped five basis points to 1.44%, finishing at a nine-year high. Meanwhile, the benchmark 10-yr yield climbed four basis points to 2.28%.
The U.S. Dollar Index (92.25, +0.63) settled with a gain of 0.7% after holding a loss of 0.2% prior to the FOMC release.
In the equity market, the two heaviest sectors--technology (-0.5%) and financials (+0.6%)--finished at opposite ends of the leaderboard. Apple (AAPL 156.07, -2.66) weighed on the tech space, dropping 1.7%, following rumors of softer-than-expected demand for the new iPhone 8, which was unveiled last week.
Elsewhere within the tech space, chipmakers underperformed, sending the PHLX Semiconductor Index (-1.4%) lower for the first time in eight sessions. Adobe Systems (ADBE 149.96, -6.64) also exhibited notable weakness (-4.2%), despite reporting above-consensus earnings and revenues.
As for financials, the space got off to a mild start, but moved sharply higher following the FOMC policy announcement. Financials' win--which marks the eighth in the last nine sessions--was a team effort as nearly all of the sector's components finished in positive territory.
The energy sector (+0.7%) also outperformed, thanks in part to an increase in the price of crude oil; WTI crude jumped 1.5% to $50.70/bbl. The EIA's weekly crude inventory report was disappointing, showing a bigger-than-expected build of 4.6 million barrels (+3.5 million consensus).
However, the Iraqi oil minister said OPEC and non-OPEC producers are considering extending, or even deepening, last year's supply-cut agreement, which is currently set to expire in March 2018. That news helped the commodity overcome the EIA inventory report and climb to its highest level in four months.
It's also worth noting that transports outperformed on Wednesday, pushing the Dow Jones Transportation Average higher by 1.6%. FedEx (FDX 220.50, +4.50) was one of the DJTA's strongest components (+2.1%), despite issuing below-consensus guidance on Tuesday evening.
In politics, reports indicate that Senate Majority Leader Mitch McConnell (R-KY) intends to put a new health care bill on the floor next week. In order to avoid an overlap with the vote, reports indicate that Congress may delay releasing a tax reform outline until the first week of October.
Reviewing Wednesday's economic data, which included August Existing Home Sales and the weekly MBA Mortgage Applications Index:
Existing home sales for August decreased 1.7% from July to an annualized rate of 5.35 million units while the Briefing.com consensus expected a reading of 5.42 million. The prior month's reading was left unrevised at 5.44 million.
The key takeaway from the report is that notable supply constraints remain, which will continue to act as a drag on overall sales due to the limited inventory and the high prices on available inventory that is crimping affordability.
The weekly MBA Mortgage Applications Index decreased 9.7% to follow last week's 9.9% rise.
On Thursday, investors will receive several economic reports, including the weekly Initial Claims Report (Briefing.com consensus 310K) at 8:30 ET, the September Philadelphia Fed Index (Briefing.com consensus 17.1) also at 8:30 ET, and the July FHFA Housing Price Index at 9:00 ET.
Nasdaq Composite +19.9% YTD
S&P 500 +12.0% YTD
Dow Jones Industrial Average +13.4% YTD
Russell 2000 +6.5% YTD
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