A somewhat divergent day in the market today. The Dow Industrials gained 55 points (0.5%) to 11640, but the past couple of days’ move in the Dow has been unconfirmed by the S&P and Nasdaq. Today, the S&P 500 was unchanged at 1325, and the Nasdaq fell 7 points (-0.3%) to 2338. The small-cap Russell 2000 moved very little, dropping a point to 781. The Dow Transports moved higher by 0.8% while the Utilities fell 0.5%. Bonds fell hard in the morning and managed to ralliy back some during the day, but still left yields higher across the curve: 6-month 5.02%, 2-year 4.97%, 5-year 5.01%, 10-year 5.13% and 30-year 5.20%.
Market internals were mixed, with a bias to the negative side. Volume was little changed from yesterday’s low levels - I would expect to see a bit of a pickup in volume tomorrow on the Fed news. Advances/declines were flat on the NYSE but ran 4 to 5 on the Nasdaq. Up/down volume was 10 to 9 on the Nasdaq but 7 to 13 on the Nasdaq. New highs/lows were 265/72 on the NYSE and 178/42 on the Nasdaq.
Groups were pretty evenly split, with only a few big movers. On the plus side, gold & silver stocks led in a big way, gaining 4.4%, followed by commodities (+1.7%), airlines (+1.4%) and natural resources (+1.3%). On the losing page were hospitals (-2.0%), HMOs (-1.1%), biotechs (-1.1%), semiconductors (-1.0%) and housing (-1.0%).
Energy prices were mixed: crude oil moved higher, to $70.69/barrel, along with gasoline, to $2.05/gallon. But natural gas fell to $6.58/mmBTU. The dollar fell in the morning and sat there, with the dollar index dipping below 85 to 84.83. Gold had a huge day, with the futures price pushing through the $700 barrier and the spot price holding right at the $700 mark now. Silver was strong as well, moving up to $14.44/ounce. Platinum hit and held a new all-time high of $1229/ounce today. Copper futures sit at $3.60/pound.
BMB Note: The Dow continues to try to move to new all-time highs, but the move there is not being confirmed, especially by the Nasdaq. The incredible move in precious metals and many other commodities continues to amaze - how does the Fed view this action? It has to be a huge concern, both from a message standpoint and the inevitable inflationary effects.
We’ll see what the Fed says tomorrow. The quarter-point hike is pretty much baked in, but of course, the market will pull whatever hints it can out of the statement to signal an end to the rate raising cycle. But if I’m the Fed, with the bond market deteriorating, $70 oil, $700 gold, and the dollar self-destructing, I’m scared to death. If you stop here, these factors will likely accelerate and make matters even worse. That’s why I don’t understand why the stock market wants it so badly. Be careful what you wish for.