Fed Fears Take Backseat to Encouraging Data


Shutterstock photo

"After all the concerns Fed Chair Janet Yellen's comments stirred up late yesterday, the market showed a lot of resolve today, shrugging off the downward momentum," noted Schaeffer's Senior Equity Analyst Joe Bell, CMT. "The market was also helped along by a few better-than-expected economic reports, led by the Philadelphia Fed survey that crushed estimates." The Dow Jones Industrial Average (DJI) started the session on rocky ground, but quickly surged above the breakeven point, ultimately closing solidly higher.

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

  • Why it's a good time to be an Apple Inc. ( AAPL ) options player .
  • As March Madness takes over our TV and computer screens , we check out the sentiment backdrop for two major broadcasting names.
  • Schaeffer's contributor Adam Warner dissects an $8 million bet that the CBOE Volatility Index (VIX) will spike higher by May.
  • Plus ... The Conference Board delivers some good news -- as does the Philly Fed -- and McDonald's Corporation ( MCD ) remains a popular choice among put buyers.
Trading Topic of the Week -- How to Get Started with Options: Check your motives . Never buy an option just because it's "cheap" -- because the higher risk of a 100% loss isn't always such a great bargain.

The Dow Jones Industrial Average (DJI - 16,331.05) bounced out of the red during the first hour of trading and continued to shuffle in positive territory through the close, ending with a gain of 108.9 points, or 0.7%. AT&T Inc. ( T ) was 3.4% higher today, pacing the Dow's 25 advancers, while Visa Inc ( V ) dropped 0.9% to bring up the rear.

The S&P 500 Index (SPX - 1,872.01) swung higher from an early morning pullback, closing with a gain of 11.2 points, or 0.6%. The tech-heavy Nasdaq Composite (COMP - 4,319.29) was in the green as well, adding 11.7 points, or 0.3%. Month-to-date, the Dow, SPX, and COMP are all in positive territory.

The CBOE Volatility Index (VIX - 14.52) moved slightly lower as equity indexes advanced. The "fear barometer" closed with a loss of 0.6 point, or 4%.



A Trader's Take :

"Despite all the worry and uncertainty with regard to Ukraine and just when exactly the Fed will raise interest rates, most major indexes are just off their all-time highs," added Bell. "Financials and technology have been the best-performing sectors over the past couple of days, and are continuing to show strong leadership."

5 Items on Our Radar Today :

  1. The Conference Board reported that its index of leading indicators rose 0.5% last month, following a 0.1% advance in January. The reading topped expectations and is potentially reflective that recent weather woes will not have a lasting impact on economic growth. (USA Today)
  2. The Philadelphia Federal Reserve also issued a better-than-expected report . Its manufacturing index rose to 9.0 in March from negative 6.3 in February, surpassing economists' estimates. Readings north of the zero mark are indicative of expansion. (MarketWatch)
  3. As McDonald's Corporation ( MCD ) hovers near its year-over-year breakeven level, options traders have taken a decidedly bearish stance.
  4. A relatively rare crop of put buyers bet on near-term downside in Facebook Inc ( FB ) shares.
  5. On the heels of its disappointing quarterly earnings report, FedEx Corporation (FDX) suffered a price-target cut at the hands of Credit Suisse.


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



Commodities :

Oil futures stumbled today, amid lingering concerns of a sooner-than-expected interest-rate hike from the Fed. On its final day of trading, the April contract lost 94 cents, or 0.9%, to settle at $99.43 per barrel. The most-active May contract slipped 27 cents, or 0.3%, to $98.90 per barrel.

Gold also faltered, moving lower for the fourth consecutive session. By the time the closing bell sounded, the April contract had given back $10.80, or 0.8%, to $1,330.50 an ounce, registering a new month-to-date low.


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

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

This article appears in: Investing Options
Referenced Stocks: AAPL , MCD , T , V , FB

More from Schaeffer's Investment Research


Schaeffer's Investment Research

Schaeffer's Investment Research

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com