Yesterday we felt the negative ramifications for stocks from the hawkish Fed tone from the previous day. Basically, Mrs. Yellen seems to be betting that falling prices are temporary.  “It is important not to overreact to a few readings, and data on inflation can be noisy” she said.  What if inflation misses their 2% target year after year?  This might lead to a situation of higher “real”, or inflation-adjusted interest rates…thereby resulting in lower economic growth and hurting the market in the process.

Today, the DOW was better than the NASDAQ again on a relative basis. The ongoing declines in the recent leaders like AAPL, GOOG and PCLN have been on a drag on the tech oriented index. The DOW gained 24 points today, the S&P was fractionally higher, and the NASDAQ fell 13 points.

The NASDAQ would have done worse were it not for the large gain in AMZN on its takeover of WFM. This had a very adverse effect on the large retailers such as DOW component WMT plus other large chains such as KR, COST, TGT, DLTR, DLR and even CVS. On the other hand, the industrials such as BA were at new highs along with good gains in 3M and CAT. In addition to AMZN, some others in this leadership role went higher today: NFLX, FB, and ISRG to name a few.

Bond yields were at 2.15% for the 10-year Treasury Note. The dollar was weaker against other currencies and gold was also up a little to 1256. Crude oil was a bit higher to $44.93 a barrel.

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.