The overall market traded in very narrow ranges ahead of the Fed interest rate decision today. Unfortunately they raised the federal funds rate for the second time this year. They have locked themselves into doing it with their own rhetoric about the economy doing much better and inflation reaching their 2% target…but it has not. Hopefully, they will tamp down the talk about a September increase and step aside to see how things develop. This Fed should not talk themselves into doing something that I believe they should not be doing.
It should well be remembered that the Fed raised rates ahead of the worst financial collapses of the 20th century: the Great Depression of the 1930’s, the second-worst meltdown in history in 2008, and they raised rates ahead of the 2000-2001 severe recession. The consequences of their actions have been disastrous in this area.
The DOW finished today with a gain of 46 points. BA, JNJ, MMM, and TRV were at new highs. Some of the financials sold off on the sharp decline in bond yields. BAC and JPM were in the red today while WFC and C were higher. The energy group fell down once again on the latest collapse in oil prices. TSLA roared higher to close at 380, but the FANG stocks lost value today. AAPL looks like a wounded duck, dropping nearly 1% today to end at 145.
The big story was the early collapse of the 10-year Treasury Note down to 2.13%. This is the lowest these rates have been since last November. As a result the dollar weakened, the Euro went up to 1.1219 and the Japanese yen added a little to 109.59. Gold was lower to $1,262 an ounce and crude oil was down to $44.89 after the weekly inventory report.
Donald M. Selkin
These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press.