Indexes opened down a bit to begin Wednesday – from which dip buyers came in and provided a constant stream of buying until the Federal Reserve minutes were released mid afternoon. We then saw a very quick drop but buyers rushed right back in for a second time on the day and stocks finished out near their highs. The S&P 500 gained 0.25% while the NASDAQ was down 0.02%. Some saw the minutes as “hawkish” but others thought that Janet Yellen would spread her dovish love during her speech Friday at Jackson Hole, Wyoming.
The U.S. Federal Reserve hinted on Wednesday that a surprisingly strong jobs market recovery could lead it to raise interest rates earlier than it had been anticipating. At the same time, most Fed officials wanted further evidence before changing their view on when rates should rise, according to the minutes from the central bank’s July 29-30 meeting. “Labor market conditions had moved noticeably closer to those viewed as normal in the longer run,” the minutes said, adding that policymakers “generally agreed” the job market was healing faster than they had expected.
Here are the longer term index charts.
The NYSE McClellan Oscillator worked a tiny bit of its near term overbought condition off but is still quite high. Remember, when we are in bull market mode often these overbought conditions are not worked off by any serious selling – instead we get mild down days or small flattish type action.
Ten year Treasury yields were not really buying any “hawkish” comments and remain extremely subdued.
Further helping the bull case are nice moves in areas like industrials, consumer discretionary, and semiconductors – sections of the market that people usually buy when they are bullish on the economy. The ETF for the industrials (XLI) broke out of an intermediate term downtrend today.
Meanwhile semiconductors have been one of the better areas of the market for a while. During the correction they looked poised for a fall but the bears were not very strong in retrospect.
Consumer discretionary stocks are already at new highs via their ETF (XLY).