After The Close - The U.S. stock market put in a somewhat lackluster session this morning, before moving sharply higher after 2PM (EDT) this afternoon. Moreover, the major averages were able to build on these gains into the close of the day, which is encouraging. Traders were likely pleased with the outcome of today’s FOMC meeting. Although the Fed decided to taper its asset purchases, this will likely be done in small increments, which probably comes as a relief to many traders on Wall Street. Further, the Fed indicated that it will maintain an accommodative stance well into the economic recovery. At the close of the session, The Dow Jones Industrial Average was up 293 points; the broader S&P 500 Index was higher by 30 points; and the technology-heavy NASDAQ, which actually lagged a bit earlier, was ahead 46 points. Market breadth suggested fairly broad-based buying, as advancers outnumbered decliners by about three to one on the NYSE. All of the market sectors made strides today, with leadership in the financial issues. Also, the healthcare sector moved sharply higher. While there were few weak areas in the market, the technology stocks lagged the other sectors slightly.

Technically, the S&P 500 Index found some support yesterday, and today’s move puts the major average back near its 52-week highs. Further, the gains registered over the past few days put the averages above some widely-watched levels. Specifically, the S&P 500 is above 1,800; the Dow is over 16,000; and the NASDAQ is higher than 4,000. For those looking for a holiday rally, today may signal that such a move may now be in the making. Clearly, traders were feeling better, as the VIX, now at 13.82, declined 15% today.

Traders received a number of economic reports this morning, but this news was largely overshadowed by this afternoon’s Fed announcement. Housing starts jumped to 1.09 million units, annualized, in November, which was better than expected. Housing stocks moved sharply higher on the news. Tomorrow, the employment situation takes center stage, as the weekly jobless claims figures are released.

In corporate news, there were a few earnings announcement released today. In technology, Jabil Circuit (JBL) stock slipped after the company posted mixed quarterly results and issued weak guidance. FedEx (FDX) stock was down earlier on a lackluster release, but recovered later today. Also, Ford (F) shares moved lower on a weak forecast. -Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


2:50 PM EST - The long-awaited FOMC meeting concluded earlier this afternoon and it would seem, at least for now, that the bulls got what they had been asking for, namely just a slight tapering of the long-running and very popular bond-buying initiative, often termed QE3.

Specifically, the Fed will reduce, beginning in January, the monthly purchases of mortgage-backed securities and Treasuries by a combined $10 billion, going from $85 billion to $75 billion.

The rationale for this slight slowing is the continuing improvement in both the economy and the employment situation. Things are not righting themselves all at once, but they are getting gradually better and, as a result, the Fed now apparently feels confident enough to slow down the accommodative process just a bit.

And Wall Street likes what the Fed is doing--at least as far as the blue chips are concerned. Thus, after the market had been mixed going into the 2:00 PM (EST) decision, and then sold off momentarily on the slight shift, the buying has commenced with some urgency.

In fact, as we reach the last hour of the trading day, we find that the Dow Jones Industrial Average is up by about 180 points, after having climbed ahead by more than 215 points a few minutes ago. In the process, the Dow is back above 16,000.

However, the mood, while constructive elsewhere is not quite as giddy, with the S&P 500 Index up by less than 1%, while the NASDAQ, trailing on the upside all day, is ahead by less than half a percentage point. Nonetheless, the market is up solidly, overall, as we head into the final hour of the session.   - Harvey S. Katz

At the time of this article's writing, the author did not have positions in any of the companies mentioned. 


12:00 PM EST - The major market averages are putting in a mixed showing ahead of this afternoon’s much-anticipated announcement from the Federal Reserve following the conclusion of its two-day monetary policy meeting. As we reach the midday hour on the East Coast, the Dow Jones Industrial Average is modestly higher, while the NASDAQ is in the red, with some weakness in the technology sector (more below) pressuring the latter index. The S&P 500 Index is relatively unchanged. Overall, there is a positive undertone to trading, as advancing issues are leading decliners on both the New York Stock Exchange and the NASDAQ.

As has been the case for several weeks now, the economic news this morning was once again positive. Specifically, the Department of Commerce reported that housing starts came in light for September and October—the release of that data was delayed by the government shutdown in October—but rose sharply in November, totaling 1.091 million units on an annualized basis, versus the consensus expectation of 950,000. The market reacted positively to the November figures, as housing is a vital cog in the nation’s economic output. In addition to the housing data, the homebuilding stocks got a boost from a strong quarterly report before trading commenced from Miami-based builder Lennar (LEN). The solid housing data, however, weighed on the bond market. Investors are showing some appetite for risk today, meantime. Likewise, the S&P 500 Volatility Index (or VIX), also known as the “fear gauge,” is lower right now, but that could change on dime depending what the Federal Reserve has to say.

From a sector perspective, most of the 10 major groups are in positive territory, but there have been no notable moves higher. The consumer staples are leading the pack. However, yesterday’s outperformer, technology, is today’s biggest laggard. Within the technology space, the stocks of some chipmakers and industry giant Apple (AAPL) are under selling pressure. Prompting the profit taking was a below-consensus earnings report from Jabil Circuit (JBL). That report raised concerns that sales for Apple in the current quarter might disappoint.

Looking ahead to the remainder of the trading day, the investment community’s attention will be focused on this afternoon’s statement from the Federal Reserve, which is scheduled to be released at 2:00 P.M. (EST). The prevailing consensus is that there is no more than a 50% chance that the lead bank will tighten its monetary policies. And, if the central bank does decide to cut back on its monthly bond-buying activity, all indications are that it will be by a rather small $10 billion. However, if the Federal Reserve was to reduce its asset purchases by a larger-than-expected amount, it could prompt some notable profit-taking in an equity market where valuations have become frothy. Still, our sense is that the Federal Reserve will not want to rock the boat, especially with the nation’s unemployment rate still at 7.0% and some forthcoming fiscal and debt-ceiling negotiations on Capitol Hill in the new year. Although the Senate and the House were able to reach a bipartisan two-year budget deal, the still-to-come negotiations may prove to be a bit more contentious, if recent history is a gauge. Stay tuned. - William G. Ferguson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Stocks to Watch from The SurveyThere is a bit more activity on the earnings calendar today than we have seen in the past few days, although much of the news is disappointing. To wit, shares of package delivery giant FedEx Corp. (FDX), electronic payment device and software developer VeriFone Systems (PAY), cereal and packaged foods company General Mills (GIS), and electronics company Jabil Circuit (JBL) are all moving lower ahead of the bell after reporting quarterly financials. JBL stock is showing the most weakness, down more than 15% in pre-market trading. On the bright side, shares of Lennar Corp. (LEN) are indicating a moderately higher opening this morning, after the homebuilder released solid November-period results. Elsewhere, the stock of Valassis Communications (VCI) is soaring in the premarket, after the advertising company agreed to be acquired by Harland Clarke Holdings for $34.04 a share in cash. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Before The Bell - The stock market drifted about yesterday with no discernible direction, as investors nervously awaited the conclusion later today of the two-day Federal Open Market Committee (FOMC) meeting. That confab should end by 2:15 (EST) this afternoon. The question to emerge from that get-together is whether or not the nation's central bank will vote to slow down the process of quantitative easing, or bond buying, which has proven immensely popular.

At this point, the jury is out, with pundits seeming to sense that there is about a 50-50 chance that the central bank will go ahead with its long-anticipated tapering move. Should the Fed not vote to taper later today, there will be a focus on whether or not it will commit to indicating when it will take such a move. Those suggesting that the Fed will act today point to the succession of data showing that the nation's economy is now clearly on the mend. In this column, are better-than-forecast employment reports in the past two months and much stronger-than-anticipated gains in industrial production and factory usage in November. Those two data points were issued on Monday, and helped to trigger the fast start to the week by the bulls. 

In the camp suggesting that the Fed will wait until next year to move, point to the still fragile nature of a number of other issuances and to the slow pace of recovery on the unemployment front, where in spite of recent gains, the jobless rate still stands at 7.0%, an uncomfortably high level that has refused to go down with any regularity notwithstanding the continued maturation of the now four plus year-long business expansion. So, armed with these conflicting signals, the two Fed camps now eagerly await the results of the FOMC meeting, which is but five hours from conclusion. As to the market yesterday, after a mixed session early in the day in Asia and a modest pullback in Europe yesterday morning, our market drifted in and out of the plus column throughout the session, with Wall Street failing to make any further headway following Monday's stellar action, but also fighting back against any temptation to eat into those early week gains.

Thus by the close of the day, the averages were just incrementally lower, overall, with the Dow Jones Industrial Average easing back by nine points. At its worst level of the day, that 30-stock blue chip composite had fallen by close to 50 points. Early in the afternoon, it had been up by more than 30 points. The NASDAQ, meantime, eased by a half dozen points, while the Standard and Poor's 500 Index trended modestly lower throughout the day, finally closing with a loss of six points. The small and mid-cap stocks were just nominally in the red, while the advance-decline line was unfavorable to the bulls. Essentially, the U.S. equity market was on hold, with stocks marking time ahead of the Fed meeting's conclusion.

As to other influences on the day, earnings reports were few and far between, as is to be expected as we are still close to a month before the start of fourth-quarter reporting season. Among individual group's, there was some strength in the semiconductors, but renewed weakness among some metals providers, as gold fell back after several days of small gains. 

Now, as a new day dawns, and once again all eyes are fixed on the Fed, as Wall Street awaits the lead bank's decision on monetary policy. On point, the markets are likely to tread water ahead of the 2:00 PM (EST) break up of the meeting. After the results are in, however, we can expect a rise in volatility. The early guessing is that should the Fed either stand pat of taper nominally, perhaps $10 billion, or so, the market could resume its uptrend. Should the Fed be more aggressive, which we do not expect, stocks could falter anew. 

Finally, looking at the markets around the globe, we find that stocks were mixed in Asia overnight, while they are trending lower so far in Europe this morning. And on our shores, the futures are now up a bit, presaging a modestly better start to the trading day when the bulls and the bears get going in about an hour from now. – Harvey S. Katz 

At the time of this article's writing, the author did not have positions in any of the companies mentioned.