Market Direction: BULLISH alert
issued 11/10/2016
U.S.
stocks ended a volatile session lower on Wednesday, as investors grappled with
the prospect of a faster pace of rate increases in 2017 than had been
previously forecast.
The
Federal Reserve raised its key short-term rate on Wednesday, as had been
universally expected, but it also forecast three rate increases in 2017, compared
with the two that had been anticipated at its previous meeting in September.
While the revised outlook could be taken as a positive sign—the Fed has said it
would only raise rates when it deems the economy strong enough to withstand
such a move—it added an element of uncertainty to the market.
Three
rate increases next year is something of a surprise, and it may take some time
for investors to digest.
“It is indicative of a stronger economy, but
with increased borrowing costs it won’t be as easy for companies that are
reliant on debt. This is the next step in our transitioning back to an
environment where fundamentals matter more than policy, and some investors may
be pausing because of that.”
All
three major indexes briefly traded higher after the announcement, but they
turned lower as Yellen began her news conference.
In
raising rates, the Fed moved its key short-term rate to a range of 0.5%-0.75%
from 0.25% to 0.5%. The Fed decision marks the central bank’s first increase in
rates since last December, which itself was the first in about a decade.
The
Dow Jones Industrial Average DJIA, -0.60% fell 118.5 points, or 0.6%, to
19,792.66. The S&P 500 index SPX, -0.81% lost 18.44 points, or 0.8%, to
trade at 2,253.28. The Nasdaq Composite Index COMP, -0.50% lost 27.16 points, or 0.5%, to
5,436.67.
All
11 of the S&P 500’s primary sectors ended lower, but so-called defensive
names were among the weakest of the day. The utilities, real estate, and
consumer-staples sectors all fell more than 1%. Those industries have been
favored in the current environment, as low rates make their dividend yields
more attractive. Energy stocks also dropped, tracking a decline in the price of
crude oil.
Financial
stocks slumped 0.6%, erasing an initial move higher. Banks tend to be sensitive
to rate increases due to the impact it has on their business models.
The
gyrations for stocks come as the Dow has been inching closer to the key
psychological level of 20,000. The blue-chip index, along with other
benchmarks, also have been on a tear since the election, with investors
expecting President-elect Donald Trump’s policy proposals—including massive
corporate tax cuts and environmental and financial deregulation—to accelerate
growth and stoke inflation. Major indexes have hit a series of records, but
were headed firmly lower Wednesday.
The all-time highs since our initial
recommendation to go LONG
this market. Here is how the markets have performed:
Stock Market
Direction Recommendation (11/10/2016)
|
||
Dow
|
up 1,158.55 points a 6.16% gain
|
12/14/16
|
Nasdaq
|
up 277.95 points a 5.34% gain
|
12/13/16
|
S&P 500
|
up 110.05 points a 5.08% gain
|
12/13/16
|
Related Link: http://www.stockmarket-direction.com/
No comments:
Post a Comment