Markets Tick Higher Ahead of Fed Decision

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"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.

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

Trading Topic of the Week -- 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.

The 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 slipped 0.5%.

The 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%.

The 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.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

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 territory."

5 Items on Our Radar Today :

  1. 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. (USA Today)
  2. 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. (MarketWatch)
  3. 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. (Bloomberg Businessweek)
  4. Ahead of tomorrow's annual investor and analyst day, Gogo Inc (GOGO) was handed a tepid "neutral" rating before the open.
  5. As it continued to power up the charts, Tesla Motors Inc (TSLA) was again targeted by short-term option bulls.

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 :

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.

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.

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This article appears in: Investing , Options

Referenced Stocks: SCTY , MCRS , ORCL , SNDK , FIO

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