Ahead of the Federal Reserve’s two-day FOMC meeting this week, a wave of bullish sentiment flowed through the markets, sending the indices into positive territory early in the day’s session. After weeks of fearing the possibility of the Fed tapering its quantitative easing, investors seemed a little more confident today that easy money will continue to be prevalent. However, following an article by The Financial Times, Fed uncertainty struck Wall Street once again and the markets gave up some of its early gains.
Fed watch wasn’t the only catalyst moving stocks today, however; the headline number of the New York Fed’s Empire State Manufacturing Survey surged. Though the headline number beat estimates, the rest of the survey’s data was underwhelming, but that did not seem to spoil investors’ bullishness.
Another economic indicator that beat estimates, and thus spurred some buying by investors, was the Homebuilder Confidence survey. The NAHB housing market index jumped to 52 in June – the highest level since 2006. Economists were expecting the index to be 45.
Also adding to some of the bullishness on Wall Street today was a bit of M&A activity. Shares of Weyerhaeuser (WY), Lowe’s (LOW), and Johnson & Johnson (JNJ) all rose higher in the day’s session after each announced an acquisition.
A number of Wall Street analysts’ upgrades sent shares of Exxon Mobil (XOM), Conocophillips (COP), Pioneer Natural Resoruces (PXD), and Hartford Financial Services (HIG) into the green. However, downgrades of Time Warner Cable (TWC), American Capital Agency (AGNC), and Joy Global (JOY) pushed those stocks into the red.
Be sure to check the Dividend Daily for all the latest earnings reports, analyst moves, and much more.One Thing to Remember
For better or for worse, all eyes are going to be on the Federal Reserve this week. Regardless of the policy decisions that might stem from the two-day Federal Open Market Committee meeting, investors will probably end up criticizing the central bank in one way or another. As evidenced by the couple of weeks of apparent market volatility, investors seem to be pinning a lot of their hopes on the back of the Fed’s monetary policies.
This volatility can be intimidating for the individual investor. But, despite all the hoopla surrounding the Federal Reserve’s decisions and how it might impact the markets over the next couple of quarters, investors should be reminded of one essential fact – over the long-term the Fed’s decisions will probably not incur any long-term damage to stocks. All this talk about quantitative easing, tapering, rate hikes, and the like might lead to short-term fluctuations and pullbacks, but in long-run stocks will rise like they have throughout history. Don’t let the central banks nor the media scare you off from the stock market just because of some short-term policies and market fluctuations; investing in the stock market will help you generate wealth over the long-term even if you experience some losses here and there in the short-term.
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