"It was a wild day on Wall Street," observed Schaffer's Senior
Technical Strategist Ryan Detrick, as the
Dow Jones Industrial Average (DJI)
closed with minor losses after spending nearly all of the day in
the black. "We rallied out of the gate after the Fed decision,"
Detrick outlined, "but after [Fed Chairman Ben] Bernanke's Q&A
session, we saw some strong selling."
Continue reading for more on today's market, including
- Details on the Fed's latest move, news on five hot stocks,
and today's Tweet of the day, which came shortly after the Fed
Dow Jones Industrial Average (DJIA)
was unable to keep its winning streak alive, dipping into negative
territory in the final hour of trading. By the close, the blue-chip
index had given back all of 3 points, or 0.02%. Despite the
technical loss, 17 of the Dow's 30 components were higher on the
day, led by Hewlett-Packard (
), which gained 1.9%. Wal-Mart (
) continued to founder amid concerns out of India, and closed with
a 2.8% loss.
S&P 500 Index (SPX)
managed to eke out a victory, however, peeking above breakeven at
the closing bell to settle with a gain of 0.64 point, or 0.04%.
Nasdaq Composite (COMP)
surrendered 8.5 points, or 0.3%, to close slightly off its low of
CBOE Market Volatility Index (VIX)
powered higher during the last 90 minutes of trading, gaining 2.3%,
or 0.4 point. The momentum was not enough, however, to carry the
index through the 16 level.
A Trader's Take
"You can look into what Bernanke said (or how he said it) all
you want," said Detrick, "but the reality is that after five
straight up days, it won't take much for some sellers to take
profits ... I think that is what we saw this afternoon. In the end,
I don't think the Fed did anything to rock the boat here." Detrick
concluded on a forward-looking note: "We've been waiting all week
for this Fed announcement and now we can move on with trading since
it's out of the way."
3 Things to Know About Today's Market
- The Federal Open Market Committee said the expiring
"Operation Twist" program would essentially be re-booted with a
fresh plan to purchase $45 billion* in Treasuries each month. For
the first time, the central bank also provided (rather distant)
targets that would flag the end of the current interest-rate
environment. Interest rates will be held near zero until
unemployment drops to 6.5%, with the caveat that inflationary
projections cannot be higher than 2.5%.
- On the fiscal-cliff front, the legislative and executive
bodies remain at an impasse, with one House member quipping,
"it's getting worse, not better." Reflecting on a Tuesday-evening
call with President Obama, House Speaker John Boehner, R-Ohio,
noted, "we got some serious differences."
- Warren Buffett's Berkshire Hathaway (NYSE:BRK.A) invested in
itself, spending $131,000 per share on 9,200 Class A shares. The
$1.2 billion investment was regarded favorably on the Street, as
the shares rose more than 2% on the day.
... Pope Benedict XVI posted his
first three Tweets
to more than one million followers this morning. Lest ye cynics
believe there was someone else behind the proverbial pen, a video
was released showing the pontiff using an iPad to craft the
Today's Top Tweet
"ok now that that uncertainty is out of the way we are done
with uncertainty. Oh... wait..."
5 Stocks We Were Watching Today
- Short-term Netflix (
- Microsoft (MSFT) was
upgraded to "buy" from "hold"
and announced plans to ramp up production of its Surface
- Call buyers placed bets on a
in Pandora Media (P).
- While Wal-Mart (
) retreated amid news of an inquiry in India, aggressive call
- Put buyers
have taken a recent shine
to Starbucks (SBUX) as the stock challenges technical
Question of the Day
: What happens to a stock's options when the stock splits?
: When a stock splits, the options are adjusted accordingly, along
with the option symbols. For example, if a stock splits
two-for-one, the option holder will have twice as many options (at
half the strike price). However, when the split is non-integral
(3:2) or a reverse split (1:5), the resulting option contract may
be more complicated. A three-for-two stock split of a stock trading
at $60, for example, would leave holders of the 60 call with
40-strike calls each covering 150 shares of the underlying. In the
case of a one-for-five reverse split, an options buyer holding one
contract (worth 100 shares of the underlying) holds one contract
(worth 20 shares each).
For a look at today's options movers and commodities
activity, head to page 2.
January oil futures moved up 98 cents today, or 1.1%, to settle
at $86.77 per barrel. The yellow metal also gained ground in
response to the Fed's continued commitment to accommodative
monetary policy. February-dated gold futures closed at $1,717.90
per ounce, up $8.30, or 0.5%.
*Editorial note: This figure has been corrected from an
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