Fed Fueled Rally Stalled By Yellen

$DXY, $DIA, $SPY, $QQQ, $, ,

Janet Yellen put the brakes on the Fed fueled US stock rally, drove gains in the and sent 2-year Treasury yields to their highest mark since Y 2011 after she said the US economy is performing well and December remains a “live possibility” for higher interest rates. Jawboning again…

The Standard & Poor’s 500 Index fell from a 3-month high, the USD strengthened Vs EM currencies as Ms. Yellen said improvements in the economy sets the stage for a rate increase by the end of the year. 2-year Treasury yields topped 0.80% after the comments pushed the market odds of a December rate hike to 58%.

Ms. Yellen’s comments came during testimony to the US Congress and followed ADP’s private report on payrolls that signaled steady improvement in the local labor market.

The Fed Chairwoman indicated there was an increased likelihood of a rate increase at the bank’s last Y 2015 meeting should economic data continue to assure policy makers of an acceleration in inflation over time. The government’s monthly jobs report is out Friday.

The fell 0.4% to 2,102.31 by 4:00p in New York, sending the gauge down from its highest level since July.

Earnings news weighed on sentiment Wednesday as disappointing results from Inc. (NYSE:TWX), and 21st Century Fox Inc.(:FOX) sent media companies South.

shares followed (USO) lower, falling for the 1st time in 6 sessions.

Facebook Inc. (NASDAQ:FB) rose as much as 5.1% in extended trading after reporting Q-3 earnings that exceeded analysts’ estimates.

The USD rose to its highest marks in more than 3 months Vs the after the ADP Research Institute’s jobs report showed hiring in the US expanded more than forecast last month, supporting speculation of a rate increase in December.

The Dollar Spot Index (USD Vs 10 peers), added 0.7% after trading little changed Tuesday and falling over the 3 days before that. USD climbed 0.9% to $1.0862 per Euro and gained 0.4% to 121.57 Yen.

This market is now all about the interest rate outlook.If the US data comes in a little soft or European data is not too bad it does not make a difference. Everything is irrelevant aside from the US Fed’s interest rate talk.

Wednesday the US major market indexes closed at: DJIA -50.57 at 17867.58, NAS Comp -2.65 at 5142.48, S&P 500 -7.47 at 2102.32

Volume: trade was above average as more than 900-M/shares changed hands on the NYSE.

  • NAS Comp +8.6% YTD
  • S&P 500 +2.1% YTD
  • DJIA +0.3% YTD
  • Russell 2000 -1.1% YTD
Analysis for DIA:OverallShortIntermediateLong
Neutral (0.13)Neutral (0.14)Neutral (0.15)Neutral (0.10)
Analysis for SPY:OverallShortIntermediateLong
Neutral (0.08)Neutral (0.19)Neutral (0.10)Neutral (-0.06)
Analysis for QQQ:OverallShortIntermediateLong
Bullish (0.27)Bullish (0.35)Bullish (0.44)Neutral (0.01)
Analysis for USO:OverallShortIntermediateLong
Neutral (-0.01)Neutral (0.06)Neutral (0.08)Neutral (-0.18)

Stay tuned…

Paul Ebeling