The markets continued to roar today, extending the gains we saw in the past two trading sessions. Following some optimistic economic data – jobless claims and personal income were in-line with estimates, while pending home sales easily beat expectations – the market kept on this week’s rally. However, what really brought about the bullish sentiment this week has been the dovish communications coming from officials within the Federal Reserve System.
Despite today’s gains, a number of companies’ quarterly earnings did not impressed investors, which caused their stocks to fall. Among these losers today were Paychex (PAYX), Schnitzer Steel (SCHN) and McCormick & Co. (MKC). On the other hand, earnings from Conagra Foods (CAG) pleased investors, and as a result those shares are closed in positive territory.
Wall Street analyst upgrades of Zoetis (ZTS), Seagate Technologies (STX), Western Digital (WDC), Autoliv (ALV), Macy’s (M), and Precision Castparts (PCP) helped those stocks rise into the green, outpacing the overall market. A downgrade of Air Products and Chemicals (APD) caused that stock to fall.
Be sure to check the Dividend Daily for all the latest earnings reports, analyst moves, and much more.It’s Fedspeak Week
Following last week’s FOMC meeting and Ben Bernanke’s subsequent press conference, the markets reacted quite negatively, and stocks, bonds, and commodities all took quite a hit. Investors and traders feared that Bernanke’s statements implied that the Fed would soon start to reduce their monetary stimulus program known as quantitative easing, reducing the amount of liquidity in the markets.
To say the least, Bernanke (and Fed chairmen of the past) has never been the best communicator and the markets tend to have quite a reaction to his statements, whether intended or not. Regardless, this communication problem has created a lot of uncertainty in the markets, which has been created tough waters to tread for investors and traders of all kinds.
Now this week, a number of the Federal Reserve Board Governors and Federal Reserve Bank Presidents have held pre-scheduled press conferences, speeches, and interviews, and from what it seems, these officials have had the job to clean up the recent market interpretation of Bernanke’s comments. They’ve attempted to ease the markets’ fears, telling the world that the Fed’s job is not done and the monetary stimulus will continue until the economy improves.
Despite their best attempts, the Federal Reserve officials have just created more uncertainty for the markets going forward. At a certain point, the Federal Reserve would be wise to take a less is more approach with communications. Nonetheless, they have created quite a murky environment for investors and traders going forward.
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