Don't Fight the FED -S&P Up 0.77% To Record High
Market indices rallied after the FED testimony as investors inferred more of the same easy money policies. Economic growth was cut to a range of 2.1-2.3% from an earlier forecast of 2.9%. The "taper"was cut $10B to $35B a month as widely expected. Janet Yellen cautioned on making interest rate projections but FED officials are expecting 1.125% by the end of 2015. Despite a slight increase in the CPI compared to forecast, wage growth remains lower minimizing risk of inflation.
Materials and Utilities were the strongest sectors up 1.34% and 1.77% respectively. The market expects low interest rates near term with the TSY ten year yield down slightly to 2.60%. The dollar was a tad weaker against the Euro and the Yen. The iShares 20+ Year Tsy Bond ETF (NYSEARCA:TLT)was up 0.77% today and 10.35% YTD.
The energy sector remained strong up 11.8% YTD beating the S&P up 6.48% YTD. Gold spot was up $5.44 to $1276.
Healthcare stocks also rallied up 0.76% and the biotech sector was stronger with the IBB up 0.84% and the more speculative XBI up 1.3%.
Rayno Life Science stocks rallied with these notable winners: Achillion (NASDAQ:ACHN) up 1.45%, Biogen (NASDAQ:BIIB) up 1.65%, CardioVascular Systems (NASDAQ:CSII) up 2.21% and Qiagen (NASDAQ:QGEN) up 2.89%.
Although the indices seem sluggish over the past month NASDAQ is actually up 6.66% and trading opportunities abound.
Disclosure: The author is long ACHN, FCSC, PACB.