Closing Update for Wednesday, Sept. 23: Post-Fed Enthusiasm Fizzles

4:10 PM, Sep 23, 2009 --

• NYSE down 82.3 (1.2%) to 6,964.74.
• DJIA down 80 (0.8%) to 9,749.
• S&P 500 down 10.8% (1%) to 1,061.
• Nasdaq down 14.9 (0.7%) to 2,131.

GLOBAL SENTIMENT

• Hang Seng down 0.49%
• Nikkei down 0.70%
• FTSE down 0.06%

UPSIDE MOVERS

(+) GIS beats with Q1, raises FY EPS view to above Street mean estimate.

(+) F unveils new small car in India.

(+) SOL buying Dynamic Green Energy in stock deal, guides for Q3 revenue in range that straddles Street.

(+) AAPL gets S. Korean approval to sell iPhone there; company has no immediate plans: reports.

(+) OPXA triggers milestone payment.

(+) QTWW gains amid Energy Dept. loan for Fisker Automotive; Fisker uses QTWW's PHEV powertrain capabilities.

(+) LOW gets analyst upgrade.

(+) XLNX expects sequential sales rise.

(+) HYGS inks new order.

(+) ILI reports positive study results for genetic test's impact on weight loss.

(+) ASTI inks supply pact with TurtleEnergy.

(+) PALM prices shares.

(+) BRKR prices shares.

(+) CX prices shares.

DOWNSIDE MOVERS

(-) STX continued in two-sided trade; had posted narrow evening gain after initial decline; guided for Q1 revs at or above high end of guidance.

(-) ONXX reports statistically significant study results for Nexavar in combo with chemotherapy.

(-) ETFC completes share offering.

(-) AZO reports Q4 EPS topping year-ago quarter, missing Street.

(-) AMR prices shares, announces private offering of notes.

(-) MAR sees Q3 pre-tax impairment charge of $760 mln.

(-) CPN selling shares in secondary offering.

MARKET DIRECTION

Major stock indexes close broadly lower, down between 0.7% and 1%, at the bottom of the day's trading range. Stocks gained in the first minutes following the Federal Reserve's statement holding interest rates at record lows. Stocks eventually then turned mixed in late afternoon trading and finally, broadly lower heading into the final bell. Energy shares fell and tugged on the broader market as oil prices tumbled nearly 4%.

Stocks turned to volatile trade in the wake of the Federal Reserve's policy statement.

Federal Reserve officials held rates steady as was widely expected. Members noted the improving economy. Fed officials see signs that growth could remain slow for a long time. They also made a change to debt-buying plans.

In a statement issued at the conclusion of a two-day meeting, the Fed announced that it has extended its purchase of mortgage-backed securities and agency debt into the first quarter of 2010. Those programs were officially expected to end in December.

As expected, the Fed kept its target for its federal funds rate set at a range of zero to 0.25%. Most economists are betting that rates remain this low into 2010.

Crude oil tumbled, shedding nearly 4% and falling below $70 a barrel on the New York Mercantile Exchange. Crude fell with stocks and after the government reported a jump in crude oil and gasoline inventories as demand crumbled following the end of the summer driving season. Benchmark crude is down $2.65 at $69.11 a barrel on the November contact. The Energy Information Administration said U.S. petroleum inventories rose 2.8 million barrels in the week ended Sept 18, while gasoline inventories gained 5.4 million barrels, and distillate stockpiles, mainly diesel and heating oil, rose 3 million barrels.

Analysts polled by Platts, the energy information arm of McGraw-Hill Cos., had expected crude inventories to fall by 2.25 million barrels, but the EIA's report was in line with a separate estimate by the American Petroleum Institute. The API said crude supplies would fall by hundreds of thousands of barrels, as well.

Consumer products maker General Mills Inc (GIS) provided some early lift with its earnings results. The company was helped by strong sales in the United States and lower commodity costs.

In technology, Seagate Technology (STX) traded mixed after it boosted its quarterly forecast on better-than-expected sales. Chip maker Xilinx (XLNX) gained after the company lifted its Q2 sales guidance.

Comments

[Bill L.:]

You could feel the last dollar bull holds outs puking after the meeting... I've been looking for an intermediate term bottom... that may have been it. Not good for the stock market.

Sep 23 05:02 PM

[tunaman4u2:]

I was ABOUT to throw in the towel & just buy GE based upon unlimited fed support & declining USD...
I'd make a lot of money trading AGAINST myself, the stupid retail investor :)
At least I'm honest!

Sep 23 05:42 PM

[contango:]

"If only this sell off was the beginning of a long down trend, but it isn't. Market will keep going higher. Buy the dips"

Yes wait until earnings reality sets in....then there will be plenty of dips to buy.

Sep 23 06:56 PM

[bottoms-up:]

Don't worry, the reality of the situation is that the U.S. Government and G-20 is flat out broke and writing hot checks left an right. CNN Money, CNBC and Bloomberg have been hyping up the markets as though this whole problem were a crisis of confidence.

Ben has no exit strategy. Look at how long we were in Iraq. We gave the economy shock and awe and the only people who are really in shock and awe are the millions of broke and unemployed people in this country.Some of the press is now catching on to the fact the Fed has been buying up 80 percent of all the paper junk hanging around out there.

Too bad Krugman has tenure, let alone a Nobel Prize.

Sep 23 07:16 PM

[David White:]

Bill L.: I agree with you. The USD rallied strongly after it fell. Prechter's prediction for a USD rally based on there being only 3% bullish sentiment is weeks old now. The fall today may have been the capitulation phase. The USD rallied strongly after it hit bottom.

Also the Fed did announce that they are intending to end some programs. They gave a general date for the MBS program. They have already given a date for the Treasury buying program. The Fed has also been slowly removing money from the money supply since June (they were puting money in before that). Further the Fed seemed to be hinting that it would begin raising rates in the Mar. - June time frame of 2010. All of these things have to be mildly bullish for the USD.

Add to all this that the Japanese Yen got a big surge from Japan's recent elections. That news is getting stale now though. Australia didn't raise at the last RBA meeting. That was mildly bullish for the USD. The pump is primed. We now have to see what emerges.

The markets are definitely primed to go down even without a huge rally in the USD though. The oil inventory build was at least 3 times a normal good build announcement. The net build was 11.2M barrels for oil, gasoline, and distilates. That should keep oil reeling for the rest of this week. It should put pressure on the SPY to the down side. It should also put pressure on the USD to the upside. When you have got all the ducks in a row, sometimes things do go the way you expect them to. We will have to see.

Sep 23 07:23 PM

[marketstudent:]

How do you all think that TNA will do in a highly inflationary economy?

Sep 23 08:21 PM

[Bill L.:]

As a general rule, I never own anything past 90% bulls, and I never stay short past 10% bulls.


On Sep 23 07:23 PM David White wrote:

> Bill L.: I agree with you. The USD rallied strongly after it fell.
> Prechter's prediction for a USD rally based on there being only 3%
> bullish sentiment is weeks old now.

Sep 23 09:50 PM