Equities Update: Post-Fed Gains Hefty, But Temporary

4:19 PM, Nov 4, 2009 --

• NYSE up 17.7 (0.3%) to 6,830.43.
• DJIA up 30 (0.3%) to 9,802.
• S&P 500 up 1 (0.1%) to 1,047.
• Nasdaq down 1.8 (0.1%) to 2,056.

GLOBAL SENTIMENT

• Hang Seng up 1.76%
• Nikkei up 0.42%
• FTSE up 1.45%

UPSIDE MOVERS

(+) ABK swings to profit.

(+) ACAS reaches deal with lenders.

(+) IRE jumps despite lower profit, says it may need new aid.

(+) DRIV beats with Q3, offers mixed guidance.

(+) GNVC gets FDA orphan status for TNFerade.

DOWNSIDE MOVERS

(-) GRMN turns lower despite beating with Q3.

(-) CMCSA gives up earlier gain; beats with earnings, meets with revenue.

(-) HIG gives up earlier gain despite Q3 beat, raised guidance.

(-) STEC continues evening slide after company beats with Q3, but guides for Q4 below Street.

(-) VG extends losses on revenue decline.

(-) TRLG misses with Q3, guides below Street.

MARKET DIRECTION

A late-day slide left the major averages narrowly mixed at today's closing bell, well off gains of 1% or better seen earlier in the session. Financials and energy shares led the retreat. Stocks gave up robust gains that followed upbeat economic data and a signal from the Federal Reserve that interest rates would remain low for awhile.

Stock averages added to earlier gains after the Federal Reserve indicated it's in no hurry to lift interest rates from record lows even amid signs the recession is over. As expected, the Fed kept its target for its federal funds rate set at a range of zero to 0.25%.

The Fed said economic activity has "continued to pick up" and that the housing market also has grown stronger, a key ingredient to a sustained recovery, the AP reported.

Still, Fed Chairman Ben Bernanke and his colleagues warned that rising joblessness and hard-to-get-credit for many people and companies could restrain the rebound in the months ahead, the AP said.

Investors had been relatively risk-averse over the past several sessions. The major averages hit new 2009 highs in October only to be followed up with inconsistent economic data.

Economic data issued Wednesday were largely positive for stock bulls.

Private-sector firms in the U.S. cut 203,000 jobs in October, according to the ADP employment report released Wednesday. It was the fewest jobs lost since July 2008. In September, a revised 227,000 jobs were lost compared with the 254,000 originally reported. Investors hope this bodes well for Friday's key monthly jobs report from the Labor Department.

The Institute for Supply Management said service industry activity grew for a second straight month in October. Although the index slipped to 50.6 in October from 50.9 in September and was below economists' mean forecast for 51.5, investors focused on new orders. The ISM said new orders, which are an indicator of future business activity, grew faster. Business activity also picked up, it said.

Earnings continue to trickle in. Cisco Systems (CSCO) is counted among a host of post-bell earnings releases.

Analysts polled by Thomson Reuters are expecting the company to report a profit of $0.31 per share on revenue of $8.74 billion.

Comments

[tunaman4u2:]

GS knows when to trade against euphoria...
Quite the opposite of wall of worry post fed eh?
OR
Buy when others are fearful? As in buy the dollar on panic.

Market top looks pretty established. Conversely I don't expect a big market fall with "Excessive low rates for Extended period of time"

Nov 04 04:42 PM

[Alex Trias:]

Days like today, and indeed, most days over the past two weeks, suggest a pattern of selling off on what should be considered pretty good news. I can't help but wonder whether we have gone from bullishly scaling a wall of worry to bearishly descending a hill of hope. Big picture, I'm concerned we are at the end of the equities rally. Any sort of shock to the system has the potential to throw everything off a cliff, and it seems little will fuel an ascent higher.

Technically, the broad market observed the 50 day exponential moving average as resistance, suggesting the path of least resistance is now lower. That measure could be misleading, though. We are quite oversold on a short term basis, and still holding support at the 65 day exponential moving average. That would normally be a precursor to a significant move higher. Perhaps seasonal factors support a push higher, as well. Finally, shorter term moving averages remain firmly above longer term moving averages, indicating the long term upward trend is still in place.
Overall, it appears too soon to call an end to the bull market that started back in March of this year. By the same token, it's getting harder and harder to anticipate much easy money in the markets at this point. The real challenge, though, is that risky assets are not all that exciting to invest in, but so-called "risk free" assets, like US Treasuries, are flat out non-investable situations - unless you're happy to take a guaranteed after-tax, inflation-adjusted loss. If risky and risk-free assets are equally un-attractive, investors face a mild conundrum. Hence, I think the only reasonable advice at this point is to just go on vacation.

Nov 04 04:57 PM

[robert.b.fe...:]

It appears that the resistance VS support top is in place and seasonal adjustments will keep in this range. Not good for retailers during the holiday season and that is what the market is telling us. Many of the large retailers are rolling out "Black Friday." sales early this year hoping to salvage the season. Much of the transportation indexes indicate a slow down as well (SEA) seems to have settled at just above $12 and I expect it to remain there until 2010 Q1 or Q2.

Nov 04 05:38 PM

[Options Tra...:]

if the market isn't already this overbought and the Dow this near the dreadful 10,000 points level, today's Fed action would have the market rocketing as it did over the past few month. Its a technically driven market right now as traders start taking profits instead of risk what they have made over the past few months.

Nov 04 10:06 PM

[Zombie Banker:]

Looking at technicals, we still have more down to go (and for that matter, more deflation in the economy) before the markets have any real reason (other than speculation with stimulus money) to rise.
Maybe it will have a reason to go up when inflation settles in.

Nov 04 11:39 PM

[FB5000:]

pay attention

sell of was coincident with the house accelrating the consumer fiannce legislation. it sold off on news. financial led theway down.

Nov 04 11:42 PM