Dovish commentary in the Federal Reserve minutes encouraged buyers to show up in droves as worries that the Fed might tighten in early 2015 were pushed off the table. The S&P 500 jumped 1.09% and the NASDAQ 1.72%. We are seeing an increase in day to day volatility and random movement based on headlines so it remains a time to be cautious until we settle into a new pattern.
The members of the Federal Open Market Committee agreed unanimously in March that a 6.5 percent unemployment target for raising interest rates was “outdated” and should be removed, according to meeting minutes. Previously, the Fed had indicated that a drop in the unemployment rate could trigger the beginning of rate increases, provided it accompanied a 2.5 percent inflation rate. But with the jobless number nearing the target and inflation well short, the Fed decided to change gears. Overall, the minutes portray a committee set on keeping interest rates low for the foreseeable future, despite some market rumblings after the meeting.
Here are the longer term charts for the indexes – let’s watch this NASDAQ chart in particular as we have had a change in pattern for the first time in a year and a half.
Today was a second day a lot of beaten down stocks bounced – see for example Celgene (CELG) in the biotech space, and Facebook (FB).
Meanwhile conservative stocks such as Kellogg (K) continue to do well.
Oil stocks have held up well of late as well as we noted the past 2 weeks; see oil giant Conoco (COP).