Dow Pares Gain to 110 Points as Fed Chatter Hits Fever Pitch

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The Dow Jones Industrial Average (DJI) was up more than 190 points at its intraday peak, but pared its gains in afternoon action. "We got off to an incredible start to the day, but the major indices sold off quickly after rumors surfaced that the Fed will likely signal a QE tapering at this week's meeting," said Schaeffer's Senior Equity Analyst Joe Bell, CMT. "Nevertheless, most major sectors finished in the green, as we remain in a volatile trading range for the time being."

Continue reading for more on today's market, including :

plus...
  • Confidence soars among home builders, New York-area manufacturing activity improves, and Netflix, Inc. ( NFLX ) inks a megadeal.

The Dow Jones Industrial Average (DJI) logged its fifth consecutive triple-digit move, adding 109.7 points, or 0.7%, to end at 15,179.85. However, the blue-chip barometer couldn't climb back atop its 20-day moving average, which has stifled all but two daily closes in June. Twenty-five of the Dow's 30 blue chips ended higher, led by Cisco Systems' ( CSCO ) 2.5% rise. Meanwhile, Verizon Communications ( VZ ) paced the declining minority, surrendering 0.7%.

The S&P 500 Index (SPX) also trimmed its lead in afternoon trading, settling on a gain of 12.3 points, or 0.8%, at 1,639.04. Like the Dow, the SPX remains stifled by its 20-day trendline. Meanwhile, the Nasdaq Composite (COMP) fared the best of the three, tacking on 28.6 points, or 0.8%, to end at 3,452.13.


The CBOE Market Volatility Index (VIX) spent time on both sides of breakeven, but ultimately ended 0.4 point, or 2%, lower at 16.80.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"All eyes will be on Bernanke and this week's Federal Reserve meeting," remarked Bell. "The unknown timing of the inevitable shift in policy continues to hover over this market, and hopefully we will get a little more clarity this week."

3 Things to Know About Today's Market :

  • The National Association of Home Builders (NAHB) said its sentiment index rose 8 points to 52 in June, marking a seven-year peak . "With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes," said NAHB chairman Rick Judson. (CNBC)
  • The Empire State manufacturing index improved to a three-month high of 7.8 in June from negative 1.4 in May. Economists were expecting the New York Fed's manufacturing gauge to come in flat. (MarketWatch)
  • Netflix, Inc. ( NFLX ) and DreamWorks Animation SKG, Inc. (DWA) skyrocketed after announcing a multi-year deal -- the biggest original-content contract in NFLX history. (Bloomberg)

5 Stocks We Were Watching Today :

  1. Procter & Gamble (PG) speculators rolled the dice on a pullback.
  2. Groupon Inc (GRPN) shareholders could be buying options insurance .
  3. A new high didn't deter Cisco Systems, Inc. ( CSCO ) option bears.
  4. Option bulls circled The Kroger Co. (KR) ahead of earnings .
  5. Traders anticipate some short-term downside for Google Inc (GOOG).

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude futures ended modestly lower today, erasing early gains that arose from mounting geopolitical tension in Syria. By the time the dust settled, oil for July delivery shed 8 cents, or less than 0.1%, to finish at $97.77 per barrel.

Gold futures also fell, as a rally among equities reduced the metal's safe-haven appeal. By the close, August-dated gold gave up $4.50, or 0.3%, to end at $1,383.10 an ounce.

SCHAEFFER'S MARKET POSTURE



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.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: CSCO , MA , NFLX , ORCL , VZ

Schaeffer's Investment Research

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