Market Rally Continues, Following Updated GDP Figure

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"We saw strength across the board today," reported Schaeffer's Senior Equity Analyst Joe Bell, CMT. "All of the major sectors finished in the green, as health care and utility stocks led the way." The Dow Jones Industrial Average (DJI) spent the entire day in the black once again, retaking control of its 80-day moving average to close with a 150-point gain. "In the current QE-driven environment we find ourselves in, sometimes worse economic data is seen as further proof the Fed will keep their foot on the gas pedal a little while longer."

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

plus...
    The U.S. economy barely grows, mortgage rates keep rising, and Nokia ( NOK ) bears expect a short-term drop.

The Dow Jones Industrial Average (DJI - 14,910.14) made additional headway today, adding 149.8 points, or 1%, to retake control of its 80-day moving average. At its intraday high, the blue-chip index touched 14,938.98. Meanwhile, 27 of the Dow's 30 names gained ground, with Boeing ( BA ) and Home Depot ( HD ) each rallying 2.1%. At the back of the pack was Alcoa (AA), which suffered a 2.2% pullback.

The S&P 500 Index (SPX - 1,603.26) also moved back above its 80-day trendline, but it did one better; it closed atop the 1,600 round-number mark, up 15.2 points, or almost 1%. The Nasdaq Composite (COMP - 3,376.22) slightly lagged its index counterparts, with a gain of 0.9%, or 28.3 points.


The CBOE Market Volatility Index (VIX - 17.21) continued to collapse, losing 1.3 points, or 6.8%. Since Monday's intraday high at 21.91, the index has surrendered more than 21%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"The big news on the economic front this morning was first-quarter GDP growth, which was revised down to 1.8% when the consensus expected it to remain at 2.4%," noted Bell. "In turn, the markets saw a continuation of yesterday's rally, as we recover from our recent sell-off."

3 Things to Know About Today's Market :

  • The final reading for the first-quarter gross domestic product (GDP) revealed a modest annualized growth rate of 1.8%, down from the previous estimate of 2.4%. Economists had been expecting the figure to be unrevised from last month's projection. Consumer spending -- which came in weaker than expected -- played a large role in this adjustment. (Bloomberg)
  • The Mortgage Bankers Association reported that mortgage applications dropped 3% during the past week, as mortgage rates continued to move higher. The rate on fixed 30-year mortgages averaged 4.46% during the week ended June 21, reaching its highest level since August 2011. On a week-over-week basis, this reading popped 29 basis points, in the wake of last week's Fed remarks. (Reuters)
  • Narayana Kocherlakota, president of the Minneapolis Federal Reserve, appeared on CNBC to suggest the central bank offer greater clarity surrounding the federal funds rate. Kocherlakota opined that the market volatility has as much to do with this rate -- "our main policy instrument" -- as with any tapering of the Fed's bond-buying efforts. (CNBC)

5 Stocks We Were Watching Today :

  1. As the metals sector continued its retreat, long-term bears scooped up Silver Wheaton (SLW) puts.
  2. Covered-call traders were out in force on Ford Motor (F) , banking on a ceiling at the $16 level.
  3. Put buyers scooped up out-of-the-money LEAPS in order to bet on a long-term pullback in American International Group (AIG) .
  4. Nokia Corporation ( NOK ) option bears believe downside is likely over the next few weeks.
  5. Chipotle Mexican Grill (CMG) was initiated with a "buy" rating in new coverage from Sterne Agee this morning.

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 oil rebounded from an early-session loss, as August futures closed up 18 cents, or almost 0.2%, at $95.50 per barrel. The weekly inventories report indicated that supplies held steady, versus expectations for a decline.

Gold futures, however, weren't so lucky, as the precious metal continued to spiral lower. The August-dated contract sank $45.30, or 3.6%, to end the session at $1,229.80 per ounce. This was the lowest closing price for a front-month contract since August 2010. Heading into the end of the second quarter, gold is on track to have given back 23% during the last three months.

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: AAPL , BA , HD , NOK , SIRI

Schaeffer's Investment Research

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