"The consumer price index (CPI) -- a measure of inflation --
came in above the forecasted number," noted Schaeffer's Trading
Analyst Peter Bryans. "Perhaps the increase in prices reflects the
Federal Reserve's long-term goals to stimulate demand in the
economy and the market took this as a bullish sign. Housing starts
and building permits, which are considered two 'leading' economic
indicators, were also right about in-line with estimates. Tomorrow,
market participants will be listening closely to the Fed's policy
statement, which is followed by Janet Yellen's press briefing."
Ahead of these events, the
Dow Jones Industrial Average (DJI)
moved slightly higher, ending the session near its intraday peak.
Trading Topic of the Week
Continue reading for more on today's market, including
-- Reasons to Dodge Directional Risk:
Lower the risk of a 100% loss
. When you're playing straddles, at least one of your options will
typically expire with some intrinsic value remaining.
Dow Jones Industrial Average (DJI - 16,808.49)
opened the session below breakeven, but settled with a modest gain
of 27.5 points, or 0.2%. The move wasn't quite enough to power the
blue-chip index above its 10-day moving average, which is perched
near 16,833. Half of the Dow's components moved higher on the
session, paced by The Home Depot, Inc. (HD) and Goldman Sachs Group
Inc (GS), which each gained 1.4%. Pacing the declining 15 names
were Wal-Mart Stores, Inc. (WMT), DuPont (DD), Exxon Mobil
Corporation (XOM), and Johnson & Johnson (JNJ), which all
S&P 500 Index (SPX - 1,941.99)
continued to advance on the 1,950 level, rising 4.2 points, or 0.2%
to edge north of its own 10-day trendline. The
Nasdaq Composite (COMP - 4,337.23)
slightly outperformed its peers, adding 16.1 points, or 0.4%.
CBOE Volatility Index (VIX - 12.06)
dipped 0.6 point, or 4.7%, ending the session at its intraday low
but maintaining a foothold north of the 12 mark.
A Trader's Take
"Higher-beta, small-cap names in the Russell 2000 Index (RUT)
led the larger-cap SPX and Dow names, and financials were the
leading sector," Bryans continued. "The iShares Russell 2000 Index
(IWM) continues to make a strong move in positive year-to-date
5 Items on Our Radar Today
- The CPI surged 0.4% in May, the Labor Department noted,
topping economists' estimates and
registering the widest monthly increase
in 15 months. The core reading -- which excludes food and energy
prices -- rose 0.3%, its sharpest upward move since August 2011.
- The Commerce Department reported that
housing starts dipped
6.5% last month to an annual rate of 1 million, which was roughly
in line with expectations. New construction permits, meanwhile,
declined 6.4% to their slowest pace in four months.
- Market participants shifted some focus to the investment
banking sector today, as the U.S. Senate
held a hearing
on high-frequency trading practices. The goal of the panel is to
study potential conflicts of interest related to algorithmic
trading, so that individual investors can maintain a sense of
trust in the equity markets.
- Ahead of tomorrow's annual investor and analyst day,
Gogo Inc (GOGO)
was handed a tepid "neutral" rating before the open.
- As it continued to power up the charts,
Tesla Motors Inc (TSLA)
was again targeted by short-term option bulls.
For a look at today's options movers and commodities
activity, head to page 2.
Oil futures continued their retreat today, as worries over the
situation in Iraq began to ebb. The July contract gave back 54
cents on the day, losing 0.5% to close at $106.36 per barrel.
August gold futures finished lower for the first session in
seven, amid expectations for continued tapering plans on the part
of the Fed. By the close, the contract had dropped $3.30, or 0.3%,
to close at $1,272 an ounce.
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