US stocks hit fresh year highs as the Fed begins its two-day confab, and while everybody knows they’re not going to raise rates, the central bank could make enough noise on other fronts to keep people glued to their sets.
DJIA rises 51 (0.5%) to 9830, S&P 500 adds 7 (0.7%) to 1072, Nasdaq Comp gains 8 (0.4%) to 2146.
Dollar loses, crude gains, gold rises. Financials, energy lead sectors. Richmond Fed reports another expansion of manufacturing sector. Lowe’s offers a cautious outlook, but ConAgra’s doing well, given that more people are eating in these days.
The Fed begins its two-day gabfest, ConAgra and Lowe’s offer some illuminating outlooks, and everybody’s talking about climate change, but that’s all they’re likely to do, talk. It’s Tomorrow’s News Today.
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Dow’s inching toward 10000 and everyone’s convinced it’ll cross that psychological level sooner rather than later.
The bullish sentiment in the market is pretty remarkable, but at the same time, very scary. These panic levels, albeit a different kind of panic, are eerily similar to late February and early March, when panic selling brought the market to multi-year lows. Just like six months ago when it seemed like stocks would never rise again, there’s a similar sense now that nothing can push stocks down.
Of course that dangerous thinking usually marks the sign of a top or bottom. And right now, with bullish sentiment reaching scary highs and economic fundamentals still relatively weak, many market observers are questioning how much higher the market can go in the short term.
“There is a near panic ‘have to get in’ attitude among retail investors,” says Mike “Mish” Shedlock, an investment advisor for SitkaPacfic Capital Management. And while retail investors and fund managers are chasing the rally, corporate insiders keep selling their shares – usually not a good sign.
I just can’t help but feel that there’s something the stock market’s missing about the economy. It’s a feeling I had back in 2007 as well. The market was marching giddily higher, right into October, and the whole time, I’m thinking to myself, there’s something wrong here. You didn’t need to know about derivatives, securitized debt, CDOs, CDS or mortgage fraud. Home prices had doubled in five years, wages were flat. It was the very picture of an asset bubble.
Now, I see a recovery that looks like Pinocchio: it wants to be a real little boy, but it’s really just a wooden toy that moves only when somebody pulls its strings. But everywhere, we hear people talking up the recovery as if the economy is sprinting into a new bull market.
Listen, I’m no PhD. I’m willing to entertain the idea that I could be wrong. There are a lot of smart people who probably think I’m wrong. Of course, there were a lot of people much smarter than me who were wrong in 2007.
But I keep seeing all those strings pulling the economy, and wonder if and when they can be cut.
Higher premarket US stock futures generally supported by a weaker US dollar and rebound in commodity prices (oil, gold) after some selling yesterday, as well as rallying markets in Europe.
It may not be an rigid relationship, but it sure seems like equities, crude, gold and the dollar are moving in lock-step. This morning, for instance, equities are up, and so is crude and gold. What’s down? The dollar, compared to the euro. It isn’t like this every day, but it sure feels like it is.
Stocks have had a propensity to rally heading into FOMC meetings this year, so a firmer tone this morning isn’t a surprise. Two-day Fed meeting gets underway today, with the committee’s communique due around 2:15 pm tomorrow. Elsewhere, Richmond Fed’s September manufacturing survey set for 10:00 a m. And while people are interested in the Fed’s exit strategy, they’re also interested in their own exit strategies as well.
“Large numbers of professional traders have come to believe that the market’s current trajectory is unsustainable, leaving many looking for an optimal time to book profits,” says Cuttone & Co’s Bernie McSherry.
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