CLOSING UPDATE: Stock Market Rally Running Out of Steam As FOMC Sees Need for More Stimulus


The stock market closed to the downside today, giving up early gains when the Fed's announcement to leave QE unchanged triggered an aggressive bout of profit-taking across all sectors of the market. The late action in the market was proof that not only is the stock market dependent on real economic growth to fuel new highs, but the impressive run in the market might be running out of steam. This was also seen in the bond market which reversed course from the 2.48% yield low in the 10-year to close at 2.52%, 2 basis points higher from Tuesday's close.

Earnings continued to pour in with the majority beating expectations and driving this morning's gains. Although there were some underperformers such as Yelp ( YELP ) and LinkedIn ( LNKD ), earnings superstars like Dreamworks ( DWA ) and Lifelock ( LOCK ) and the expectation for Facebook ( FB ) and Starbucks (SBUX) to also beat estimates added to yesterday's record highs.

Today's economic data was primarily a non-event but did lend support to the consensus for the Fed to keep stimulus unchanged. ADP private payrolls increased 130,000 in October, below the consensus estimate, and down 15,000 from September's revised figures.

Led by a 0.8% gain in energy costs, the September consumer price index increased an as-expected 0.2%, and only 0.1% excluding the volatile food and fuel component.

Here's where the markets stood at the close:


Dow Jones Industrial Index was down 61.59 (-0.39%) to 15,618.76

S&P 500 was down 8.64 (-0.49%) to 1,763.31

Nasdaq Composite Index was down 21.72 (-0.55%) to 3,930.62


FTSE 100 was up 0.04%

Nikkei 225 was up 1.23%

Hang Seng Index was up 2.00%

Shanghai China Composite Index was up 1.48%


DWA, Reported Q3 earnings of $0.12 per share, more than half 2012 Q3 EPS of $0.29, but handily topping Capital IQ consensus of $0.05.

LVLT, Level 3 narrowed its Q3 net loss to $0.09 per share from a loss of $0.76 the year earlier.

OXBT, A meta-analysis of multiple clinical trials showed that Oxygen Biotherapeutics' levosimendan can reduce mortality in heart-surgery patients.


SODA, Reported Q3 earnings of $0.90 and revenue of $144.48, versus the Capital IQ estimates of $0.78 per share on revenue of $145 million.

BXC, Reported Q3 net loss of $$3.2 million, or $0.04 per diluted share, from a net income of $3.1 million, or $0.05 per diluted share, in the prior-year period.

CETV Forecasted 2013 revenue below expectations and warned if it can't secure additional financing, the company will stop being able to fund its operations sometime in the next year.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing , Commodities

Referenced Stocks: DWA , FB , LNKD , LOCK , YELP

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