"It was all about the Fed today," summarized Schaeffer's Senior
Equity Analyst Joe Bell, CMT. "[Fed Chairman Ben] Bernanke tried to
calm nervous investors, but it did little to ease the volatility
we've been experiencing for the past few weeks." The
Dow Jones Industrial Average (DJI)
traded in an extremely tight range for the first few hours of the
session, until a Fed-prompted sell-off drove the index sharply
lower into the closing bell.
Continue reading for more on today's market, including
The Fed meeting comes and goes, FedEx (
) reports earnings, and Applied Materials (
) bulls target new highs.
For most of the day, the
Dow Jones Industrial Average (DJI)
drifted sideways in an extremely narrow range around the breakeven
point. This sideways momentum was a distant memory by the close,
however, as the index surrendered 206 points, or 1.4%, to settle at
15,112.19. This drop shifted the Dow back south of its 10-day
moving average, although it did finish a hair above its 40-day
trendline. All 30 Dow components finished in the red, paced by
Verizon Communications (VZ), which dropped 2.9% on the day. The
"best" performer was Hewlett-Packard (HPQ), which gave back less
S&P 500 Index (SPX)
settled just off its intraday low, down 22.9 points, or 1.4%, at
1,628.93. Elsewhere, the
Nasdaq Composite (COMP)
gave back 39 points, or 1.1%, to 3,443.20. The SPX and COMP --
along with the Dow -- remain in positive territory for the
CBOE Market Volatility Index (VIX)
ended the near breakeven, despite the backslide in the major
indices. By the close, the VIX was up a fraction of a point, or
less than 0.2%, at 16.64.
A Trader's Take
"The markets grinded sideways for much of the day, but as soon
as Bernanke took the stage for his press conference, the selling
began, sending most major sectors into the red," noted Bell. "For
the most part, there was nothing unexpected said, but investors
still used the event as an excuse to take some profits after
yesterday's nice rally."
3 Things to Know About Today's Market
- The Fed meeting everyone was waiting for came and went, with
few changes to existing policy -- for now. The central bank said
continue to purchase $85 billion in bonds
each month while holding the interest rate near zero. Also
included in the statement, though, was the opinion that downside
risks to the economy have "diminished" since last fall. In a
press conference that followed the interest-rate decision,
Federal Reserve Chairman Ben Bernanke confirmed expectations that
so-called "tapering" of existing bond-buying efforts
would likely begin
toward the end of this year, assuming the economy continues to
Mortgage rates rose
for the sixth consecutive week, climbing 2 basis points to an
average of 4.17 (a 15-month high) in the week ended June 14. In
response to these escalating rates, the number of new mortgage
applications (for those both looking to refinance or purchase new
property) dropped 3.3% last week.
- FedEx (
(excluding items) hit $2.13 per share, exceeding analysts'
estimates by 17 cents. Revenue edged up nearly 4% to $11.4
billion. The shipping giant is regarded as a broader barometer of
global economic health, as it transports so many different types
of goods across the world.
5 Stocks We Were Watching Today
- Following its quarterly earnings report,
Adobe Systems (ADBE)
earned upgrades and price-target hikes from Wall Street.
- Put buyers wagered on a short-term pullback for
Alcatel Lucent (ALU)
tagged a new annual peak, spurring a rash of call buying.
Morgan Stanley (MS)
option bulls used long calls to bet on a strong finish to the
- Call buyers expect a new high in
Applied Materials (
shares by mid-July.
For a look at today's options movers and commodities
activity, head to page 2.
Oil futures declined slightly today, after the weekly inventory
report revealed a slight (but unexpected) gain in supplies.
July-dated crude lost 20 cents, or 0.2%, to settle at $98.24 per
barrel, but futures remained active in after-hours trading as
Federal Reserve Chairman Ben Bernanke addressed the press.
Gold futures closed higher ahead of the 2:00 p.m. Fed
announcement, with August-dated gold adding $7.10, or 0.5%, to
settle at $1,374 an ounce. After hours, the precious metal was
losing ground as Bernanke's remarks resulted in a stronger