After a solid rally, stocks now face the Fed
The central bank's decision on whether to trim its bond buying may dictate if the market has a good week. Oracle and FedEx earnings are on tap.
For that we can thank the lessening of tensions over Syria, although one should probably assume Syria hasn't gone away.
Next week is trickier. The Federal Reserve's policy-making body, the Federal Open Market Committee, will meet for two days and then announce Wednesday how much it will trim back -- or taper -- its $85-billion-a-month bond-buying program. That is, if the Fed does anything at all.
Right now, it looks as the Fed will announce a small taper, taking the bond buying down to $80 billion or $75 billion. That helps explain why interest rates didn't move much this past week. The 10-year Treasury yield ended Friday at 2.898%, down from 2.938% the week before.
So be ready. And enjoy your winnings this past week. The Dow was up 75 points on Friday to 15,376 on its way to that 3% gain for the week.
The Standard & Poor's 500 Index ($INX) added 5 points to 1,687.99. It was up 2% on the week, its sixth-best week of the year. It's also just 1.3% below its record close of 1,709.67, set on Aug. 2.
The Nasdaq Composite Index ($COMPX) rose 6 points to 3,722 and ended the week up 1.7%.
For the year, the Dow is up 17.3%, with the S&P 500 up 18.3% and the Nasdaq up 23.2%.
So much for September being a terrible, no-good, awful month five years after the 2008 crash.
But half the month is still to come, and there's October after that. And, for those who want to be frightened, October 2008 saw the Dow fall 14.1%, with the S&P 500 down 16.9% and the Nasdaq 17.7%.
Moreover, stocks have basically stalled since early August. The Dow and S&P 500 dipped as much as 5% from their Aug. 2 highs and then rebounded, although neither has regained its highs. The Nasdaq, however, has moved to levels last seen in September.
Wednesday is an important day for the Fed. Its announcement will come out at 2 p.m. ET, and Fed Chairman Ben Bernanke will hold a news conference afterward to discuss the decision.
It is true that Fed days -- or days when Bernanke is, say, testifying on Capitol Hill -- can create some wild volatility.
On May 22, when Bernanke suggested to Congress that the Fed might taper its bond-buying program (with an eye toward ending its next year), the Dow shifted from a gain of 155 points to a loss of 80 points -- or a swing of some 235 points.
When Bernanke discussed tapering at the news conference after the Fed's June 18-19 meeting, the Dow fell 206 points on June 19 and an additional 354 points the next day.
Bond traders interpreted the Fed talk about tapering as a signal the central bank was going to actually push interest rates higher. The 10-year Treasury yield moved from 1.61% in May to a high of 2.98% on Sept. 5 and then drifted back.
This Fed meeting has the added importance because of all the speculation over who will succeed Bernanke as Fed chairman. The front runners are former Treasury Secretary Larry Summer and Janet Yellen, the Fed's vice chairman.
The market moved not just because tensions eased over Syria and its alleged use of sarin gas against its citizens.
The market's strength was in industrial stocks such as Boeing (BA) and United Technologies (UTX), airlines, including Delta Air Lines (DAL), homebuilders like M.D.C. Holdings (MDC) and consumer stocks like Walt Disney (DIS) and Netflix (NFLX).
Chip giant Intel (INTC) was the Dow's leader on Friday, after an upgrade and a target boost to $30 from Jefferies.
There is more to the week ahead than just the Fed. On Wednesday, the government reports on August housing starts, with the National Association of Realtors releasing its report on August existing-home sales on Thursday.
There's a Consumer Price Index report due Tuesday. The Philadelphia Federal Reserve Bank will release a widely watched report on manufacturing on Thursday.
Wednesday offers a number of earnings reports that will offer clues on where the economy stands: Cracker Barrel (CBRL), FedEx (FDX) and General Mills (GIS) in the morning and Oracle (ORCL) and office-furniture makers Herman Miller (MLHR) and Steelcase (SCS) after the close.
Also reporting next week: Adobe Systems (ADBE) after Tuesday's close; ConAgra (CAG), Pier 1 Imports (PIR) and Rite Aid (RAD) before Thursday's open, and Tibco Software (TIBX) after Thursday's close.
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New York Fed-- there's $630 TRILLION in derivatives outstanding that prioritize ahead of stocks. Wall Street eats it once the Fed cuts off the fiat infusion.
Dallas Fed-- the average household has lost $50,000 to $120,000 over the past 5 years. MAN, that QE helped... who?
America to Ben-- if you don't man-up... you'd better be REALLY fast.
Fake Money going into the stock Market, What happens when they stop?????
Before the Fed does anything... the Gramm Leach Bliley Act has to go and restore Glass Steagall as it does...
Calling Gramm Leach Bliley what it is-- crooked legislation, and abolishing it, restores Glass Steagall immediately. Read this-- it's actually happened:
The following was a discussion point in the lengthy and now irrelevant review of the Dodd Discussion Draft of proposed legislation during the run-up to the Dodd-Frank Act. It is not included in the abridged version of the Tsunami Thread here at Duffminster, but is being reproduced since it demonstrates exactly what Summers supported and on what grounds he should be disqualified as a candidate for the Fed Chair. They knew what they were manipulating and they knew the consequences!
(3) Except as provided in section 78p(a) of this title with respect to reporting requirements, the Commission is prohibited from -
(A) promulgating, interpreting, or enforcing rules; or
(B) issuing orders of general applicability; under this chapter in a manner that imposes or specifies reporting or recordkeeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading with respect to any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act).
It speaks for itself.
The Federal Reserve's Balance Sheet liabilities, now over $3.6 Trillion Dollars.
Verizon prices RECORD $49 Billion Dollar Bond Deal. It dwarfs the last biggest deal by Apple, the former Record holder at $17 Billion Dollars. Both deals in the same year. Of course Apple Cash Balance is huge, Verizon's is massively in DEBT!
Relative to recent interest rate history, interest rates have been slowly rising in spite of the fact that actual Bonds outstanding have been soaring Globally. That will change eventually and so will the impact.
While the FED is important to a point, not to a point where they have clearly abandoned commonsense. It's not just posters stating this, it's some of the best minds on Wall-Street. It's some of the best minds off Wall-Street. IN fact, it's even among the 7 Fed Members of the Board themselves.
Now here's the problem with too much public disagreements with the Chairman of the Fed, Markets get rattled. Therefore there is far too much power in one position and the ability of members to have constructive disagreements. Far too much power with just one Entity. Anyone that has actually peered deeply into what is actually going on at the FED are shocked and dismayed.
Judgment Cometh, and That Right Soon
(but not from where you might expect - the US fed/debt issues will only serve as the detonator, whereas china will provide the actual core explosives setting off a global chain reaction)
"Asia's crowded and Europe's too old
Africa is far too hot
And Canada's too cold
And South America stole our name
We'll save Australia
Don't wanna hurt no kangaroo
We'll build an All American amusement park there
They got surfin', too
Boom goes London and boom Paris
More room for the rich and their company
And every city the whole world round
Will just be another central banks-owned town
Oh, how peaceful it will be
They'll set everybody free
You'll wear a Japanese kimono babe
And there'll be Italian shoes for me" *
* props to randy newman, curses to the big bankers everywhere ....
Well Active for starters....We had two-gun slinging Presidents in 1987 and 2008..
We do not have a gun-slinger today...2013.
In 2004-2008 maybe longer as we know(for sure), Banks and our Financial Systems were allowed to run Amok....Which was detrimental to the well being of all American Citizens.
We had a miss-managed Manufacturing Industry collapsing under it's own weight.
Then we had a Housing collapse. Loss of Jobs, etc.,etc...
And we were buried deeply into Two, life draining and monetarily draining Wars...
Thus one of the "Worst Recessions" this Country has ever experienced...
And then a Global Economic Collapse, that we were a major Domino in the set-up.
Moving ahead to 2013....We have borrowed against our Futures and our Children's also...
We had no choice in my opinion, thinking this was done many decades ago; And our alternative NOW would have been devastating, a much deeper Depression than in the past.
There are still Economic problems in parts of the Eurozone...
China's expansion was/is unprecedented; And appears there could be consequences yet to come.
The United States is recovering with some pitfalls, that need to be guarded against.
Banks are hoarding money, but still up to some bad practices.
The Rich are hoarding more money...evading taxation
And some Corporations are hoarding money...evading taxation.
The Middle Class is dwindling...
The Lower Class are getting poorer...
And all the above are expecting the Government to support everything...above.
None of this, is contributing to a "sound recovery" in my opinion.
It is not a great scenario for the time. It could be much better.
One positive, is the ending of two wars hopefully.
Active you tell us about Oct. 1987; I've done enough..
Obama should be impeached for lawless manipulation of stock with fed money using his middkmen and all of them profiting from inflating stocks of his campaign supporters using priviledged information and money with no collateral and selling this stocks to innocent people and 401k at high prices.This ie stealing..this is illegal and lawless and congress should stop it to protect innocent people that are honest.he and all of them together makes so much money with this illegal manipulations he can brive senators, fed chairmen and judges.justice is still waiting for honest people to do their job that understand freedom is not free
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Stocks are facing some serious resistance as the bears tear into the market's respite.
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