Most investors expected today to mark the beginning of the Fed
tapering program. Investors were looking for a roughly $10 billion
reduction in the Fed's $85 billion/month in purchases, if not
Instead, the Federal Reserve refrained from starting the taper,
keeping the current bond buying program intact. The FOMC said that
they wanted to see more evidence of economic growth before reducing
the bond buying, suggesting that some of the recent sluggish
data-along with fiscal uncertainty from D.C.-played a role in the
'no taper' decision.
The postponement of the taper did have a very positive impact on
stocks and commodities, pretty much across the board. The S&P
500 moved higher by about 1% following the news, while other major
benchmarks also rose about 0.75% after the announcement.
Meanwhile in the commodity world, oil jumped by about 2.5% while
gold and other metals saw similar performances. Treasury bills also
moved higher, pushing yields on the 10 year below 2.75%, with
current yields holding below the 2.70% mark (read
Forget Interest Rate Risk with These Bond ETFs
Beyond these broad markets though, investors saw some extreme
strength in a few key corners of the investing world. These managed
to lead the way higher following the surprise decision from the
Fed, and could be worth a closer look by investors who think that
this is just the beginning of the taper delay discussion.
All three highlighted below moved higher by at least 3% following
the Fed announcement, and thus look to be very sensitive to any
future changes in outlook from the central bank. However, for now,
these are leading the way higher and could be worth further
inspection following this surprising non-move by the Federal
3 Biggest Winners Following the No Taper
iShares MSCI Emerging Markets ETF (
Emerging market investments were hammered by talk of a Fed taper
earlier in the year, and many have yet to recover. Higher rates in
the U.S. along with a stronger dollar dulled the appeal of emerging
markets around the globe, leading many to sell their shares.
However, with the no taper announcement, emerging markets were seen
as a big winner, rising on the day. This is because rates retreated
while the U.S. also slumped, suggesting that tightening was at
least another couple of months off, pushing interest back into
the emerging market space (read
3 Emerging Market ETFs Still Up in 2013
Thanks to this, EEM, one of the most popular emerging market ETFs,
was up about 3% on the session, while hard hit nations like
surged 8.5%, though this was obviously an extreme case.
Market Vectors Gold Miners ETF (
A delay in the taper was also seen as good news for gold, pushing
gold bullion ETFs like
up about 2.7% on the day. While gold is generally viewed as a
risk-off type of commodity, this move higher can be traced to easy
money policies, and a weak dollar.
After all, the dollar struggled against many world currencies
following the news, pushing hard asset demand up for the session.
The lack of a taper also called into question how long any eventual
bond reduction might take, suggesting to some that precious metals
might be worth a closer look in the near term (see
Gold Mining ETF Investing 101
In particular, a look at miners has clearly paid off lately,
especially when considering the most popular ETF in the space, GDX.
This fund surged by nearly 8.8% on above-average volume, and was
clearly a great pick ahead of the meeting, and could remain so if
gold interest remains high.
iShares U.S. Home Construction ETF (
One segment of the economy that has been hurting under higher rates
is undoubtedly housing. As mortgage rates continue to rise, home
affordability becomes a question for many, pushing down interest in
the housing market.
However, with the Fed's lack of a taper and the resulting decline
in interest rates, there is hope for the housing market once more.
This is especially true if rates continue to decline, or at least
hold steady at the current levels, allowing more potential buyers
to get in on the market (read
the Comprehensive Guide to Homebuilders ETFs
Thanks to this speculation, housing stocks and ETFs soared on the
day too, easily rising more than the overall market. One fund to
keep an eye on here is definitely ITB as this targeted home builder
ETF jumped by nearly 5% on the day, and could be poised for more
gains if there are additional delays for tapering in the future.
Bernanke shocked the markets by postponing the taper once again,
choosing instead to keep the $85 billion bond purchasing program in
place. This was pretty surprising, as many though that at least a
modest taper would begin today, sending markets shooting higher in
While most stocks and commodities rallied on the news, there were a
few clear winners who benefited more than most. These include gold
miners, home construction, and emerging markets, and all three look
to remain in focus as more information is digested regarding this
surprise 'no-change' move from Ben Bernanke and the rest of the
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ISHARS-EMG MKT (EEM): ETF Research Reports
ISHARS-MS INDON (EIDO): ETF Research Reports
MKT VEC-GOLD MI (GDX): ETF Research Reports
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ISHARS-GOLD TR (IAU): ETF Research Reports
ISHARS-US HO CO (ITB): ETF Research Reports
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