Stocks Soar After Fed Minutes; Dow Jumps 181 Points


"The bounce that started yesterday continued in a big way today," noted Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "Biotech had a huge move, helping the Nasdaq Composite (COMP) up about 1.7%. Sparking the rally was the Federal Open Market Committee (FOMC) meeting minutes, which showed the central bank has no clue when to implement the first rate hike. Apparently, the fact that they can't agree is a good sign, as it could mean we have lower rates for a little longer than we thought yesterday." By the close, the Dow Jones Industrial Average (DJI) settled near its intraday peak, advancing 181 points.

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

Trading Topic of the Week -- Tips for Trading Stock Trends: Don't be afraid to buy plenty of time . When you're playing trends, go ahead and spring for that longer-term option. You'll be buying valuable time for the expected stock move to play out in full.

The Dow Jones Industrial Average (DJI - 16,437.18) blazed a steady path higher throughout the session, ultimately settling near its intraday acme, up 181.04 points, or 1.1%. All but four of the Dow's 30 components registered gains, led by Merck & Co., Inc.'s ( MRK ) 3.7% ascent. AT&T Inc. ( T ), meanwhile, paced the blue-chip black sheep, shedding 1%.

The S&P 500 Index (SPX - 1,872.18) followed suit, tacking on 20.2 points, or 1.1%, to end north of its 10-day moving average for the first time in four sessions. The Nasdaq Composite (COMP - 4,183.90) once again bested its peers, advancing 70.9 points, or 1.7%, to climb back into the black for 2014.

The CBOE Volatility Index (VIX - 13.82) declined as the session progressed, surrendering 1.1 points, or 7.2%, and erasing its week-to-date gain.



A Trader's Take :

"It is officially earnings season, and Alcoa Inc (AA) reacted positively, up over 3%," added Detrick. "Now, yes, that's just one company, but it is a good start. One constant has been earnings revisions ahead of earnings season, and this quarter was no different. When the bar is set low, it is much easier to clear. Once again, the bar is set very low, with a near-record amount of pre-earnings warnings -- most saying things weren't great due to the poor weather. Just remember, should earnings come in lower than that bar, they won't be very well received."

5 Items on Our Radar Today :

  1. The latest Federal Open Market Committee (FOMC) meeting minutes showed that the central bank's policymakers agreed to remove the unemployment threshold that they had in place for triggering interest rate hikes. "Almost all members judged that the new language should be qualitative in nature and should indicate that, in determining how long to maintain the current (low) federal funds rate, the Committee would assess progress, both realized and expected, toward its objectives of maximum employment and 2 percent inflation," the minutes said. (Reuters)
  2. La Quinta Holdings Inc (LQ) made its public trading debut today , opening below its offering price of $17 and dropping as much as 4% before finishing the session in the green. LQ is the third lodging company The Blackstone Group L.P. (BX) has taken public in the last six months, though the private equity firm did not sell shares during this morning's IPO. (Bloomberg)
  3. Meanwhile, option traders employed a variety of strategies to bet on Bank of America Corp's (BAC) direction , following news of the firm's $772 million credit card settlement.
  4. Ahead of General Electric Company's ( GE ) earnings report next Thursday, call buyers wagered on a modest advance in the shares.
  5. Constellation Brands, Inc. (STZ) calls flew off of the shelves today, following this morning's fiscal fourth-quarter earnings beat.


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



Commodities :

Oil futures reached their highest level in five weeks, as traders shrugged off a steeper-than-forecast supply rise to focus on concerns over civil unrest in Ukraine and potential delays in the reopening of Libyan ports. By the end of the day, May-dated crude had tacked on $1.04, or 1%, to settle at $103.60 a barrel.

Meanwhile, gold stumbled as investors ignored the precious metal in favor of equities. The June-dated contract gave back $3.20, or 0.2%, to settle at $1,305.90 an ounce. However, the malleable metal turned higher in after-hours trading, as traders reacted to the FOMC minutes.


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: TWTR , ISRG , GE , MRK , T

Schaeffer's Investment Research

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