On Tuesday, stocks turned in a flat performance as investors hesitated prior to any immediate changes in Federal Reserve policy (unlikely) or indications of a hike in rates in December.
In addition to a focus on the Fed, investors will also be mindful of changes in policy from the Bank of Japan. Both meet today.
Housing stocks have recently been stronger than other sectors, but yesterday’s weaker-than-expected housing data may put a halt to that advance.
Biotechnology stocks have risen 15% since the end of June, and the exchange-traded fund iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB) gained 1.4% yesterday (see Trade Of The Day). The sector’s gain resulted from better earnings projections, acquisitions — Allergan PLC (NYSE:AGN) acquired Tobira Therapeutics Inc (NASDAQ:TBRA) for $1.7 billion — and accelerated approvals for several drugs.
The bond market yields have risen in recent sessions in anticipation of a rate increase sometime this year, taking pressure off of the Fed to act immediately.
At the close on Tuesday the Dow Jones Industrial Average rose 10 points, closing at 18,130, the S&P 500 was flat at 2,140, the Nasdaq rose 6 points to 5,241 and the Russell 2000 closed at 1,228 for a loss of 4 points. The NYSE’s primary exchange traded 759 million shares with total volume of 3.1 billion shares. The Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by 1.3-to-1, and on Nasdaq decliners led by 1.1-to-1. Blocks on the NYSE rose slightly to 4,774 from 4,627 on Monday.
Of all the indices, except the Dow transports, the SPDR S&P MidCap 400 ETF (NYSEARCA:MDY) is weakest. Immediately following a new high earlier this month, the MDY gapped down and even broke the support line of the bull channel that held firm for over two months. Following a mediocre CBR Buy signal last Monday, prices fell slightly and now appear to be stuck in the $271 to $279 range. Negative volume has increased and MACD is oversold.
Conclusion: Investors and traders have been on edge for weeks, waiting for the next shoe to fall from the Fed. Today we will know whether the FOMC will raise rates now or put it off until after the election.
Before the Fed’s decision, the Bank of Japan is expected to announce more easing and perhaps even continue its negative interest rate policy on some deposits. A continuation of a negative rate policy would signal that Japan’s economic future is weaker than previously estimated.
“Waiting for Godot.”
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
