Dow, S&P 500 Tag Record Highs Following Fed Update

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"Today was all about the Fed," said Schaeffer's Senior Equity Analyst Joe Bell, CMT. "In a somewhat shocking move for the market, the Federal Reserve made its highly anticipated policy announcement, and decided not to begin tapering at this time. The markets reacted quite favorably, as the Dow Jones Industrial Average (DJI) jumped more than 200 points from its intraday lows." As a result, the index tagged a new record high.

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

  • Schaeffer's Senior Options Strategist Tony Venosa, CMT, explains why SolarCity ( SCTY ) could be ripe for the bullish picking in his latest Chart of the Day installment.
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  • An early morning price-target hike for this well-known financial stock triggered a flurry of bullish activity.
plus...
    Housing starts edged slightly higher in August, BlackBerry ( BBRY ) announced massive layoff plans, and Zynga ( ZNGA ) attracted front-month option bulls.

The Dow Jones Industrial Average (DJI - 15,676.94) was parked in negative territory this morning -- and for the first half of the afternoon, as well -- before rallying to an all-time intraday peak of 15,709.58 around 3 p.m. By the closing bell, the index was up 147.2 points, or 1% -- notching a new record closing high. Once again, Alcoa ( AA ) led the 29 advancing blue-chips with a gain of 3.6%, while UnitedHealth ( UNH ) -- the sole decliner -- lost 1.7%.

The S&P 500 Index (SPX - 1,725.52) experienced a few brief blips higher this morning, but like the Dow, spent a considerable amount of time in the red. Following the Fed news, however, the SPX touched a record intraday peak of 1,729.44, and finished with a gain of 20.8 points, or 1.2% -- again, marking an all-time closing high. Meanwhile, the Nasdaq Composite (COMP - 3,783.64) climbed 37.9 points, or 1%, finishing at its highest level in nearly 13 years.

Conversely, the CBOE Market Volatility Index (VIX - 13.59) took a tumble after the FOMC update, shedding 0.9 point, or 6.5%, by day's end.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"With today's rally, most of the major indexes broke out to new all-time highs, and the scary pullback in August is now nothing but a blip in the rearview mirror," mused Bell.

3 Things to Know About Today's Market :

  • Wall Street cheered the Federal Open Market Committee's (FOMC) latest policy update , as the central bank unexpectedly voted against scaling back its bond-buying program in the near future. "The Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases," the Fed stated. "The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement." (The New York Times)
  • The Commerce Department said housing starts rose by a smaller-than-expected 0.9% in August to a seasonally adjusted yearly rate of 891,000. On a year-over-year basis, however, starts were up 19%. Meanwhile, building permits declined by 3.8% last month to an annual rate of 918,000. (MarketWatch)
  • On the heels of recent buyout buzz, BlackBerry ( BBRY ) announced it will be making massive staffing cuts by year's end. Sources said the mobile phone maker could end up laying off as many as 40% of its employees, and that the pink slips will be distributed across the board. (CNBC)

5 Stocks We Were Watching Today :

  1. Nokia (NOK) received an upgrade and a price-target hike at Credit Suisse in pre-market action.
  2. Near-term option bulls swooped down upon Zynga ( ZNGA ) , and snapped up September-dated calls.
  3. Analysts at Baird downwardly revised their opinion of Caterpillar (CAT) , despite recent gains.
  4. Facebook (FB) saw a surge in call trading, but a large portion reflected sell-to-close activity.
  5. Put buyers gravitated toward Walt Disney (DIS) , wagering on short-term losses for the entertainment giant.

EARNINGS

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 snapped their losing streak, thanks to a drop in oil supplies, as well as the Fed's decision not to taper its bond-buying program. By the closing bell, October-dated crude added $2.65, or 2.5%, to end at $108.07 per barrel.

Meanwhile, gold futures settled lower ahead of the Fed announcement, as gold for December delivery shaved off $1.80, or 0.1%, to finish at $1,307.60 an ounce. However, following the FOMC's well-received update, the malleable metal climbed almost 3% in electronic trading.

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: AA , BBRY , SCTY , UNH , ZNGA

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