A Divided FOMC Walking ‘The Trump Tightrope’

A Divided FOMC Walking ‘The Trump Tightrope’

$DIA, $SPY, $QQQ, $RUTX, $VXX

The S&P 500 increased 0.8% on Wednesday in a broad-based advance. Upbeat results and reassuring guidance from Target and Lowe’s reinforced the notion that the US consumer is in good shape, while investors parsed the FOMC mins from the July meeting. 

The Dow Jones Industrial Average increased 0.9%, the Nasdaq Composite increased 0.9%, and the Russell 2000 increased 0.8%. 

Wednesday’s positive disposition formed overnight as futures steadily increased alongside a modest uptick in US Treasury yields.

Out sized gains in Target (TGT) and Lowe’s (LOW) following their earnings reports helped solidify the market’s positive stance throughout the day. 

All 11 S&P 500 sectors finished in the Green, with the consumer discretionary (+1.8%) and information technology (+1.2%) sectors gaining over 1.0%. The consumer staples (+0.3%) and communication services (+0.4%) sectors rose modestly. 

Price action was relatively muted leading up to the release of the FOMC Minutes, which had a noticeable effect on the US Treasury market.

The mins indicated different viewpoints on where the fed funds rate should be (some called for a 50-basis points rate cut, while others favored no change).

In addition, it was said in the mins that the Fed will remain “flexible” and focused on the implications of incoming data for the outlook.

The mins produced some knee-jerk selling on the shorter-end of the yield curve, causing some curve-flattening activity that garnered some negative-minded attention. The 2-yr yield increased 6 basis points to 1.57%, and the 10-yr yield increased 2 basis points to 1.58%.

At a point before the close, the 2s-10s spread briefly inverted again.

The .DXY increased 0.1% to 98.29.

WTI Crude Oil declined 0.9%, or $0.53, to $55.65bbl.

It should be noted that the Fed meeting preceded a tariff announcement from President Trump, a brief 2s-10s spread inversion, and weakening global data.

The FOMC mins may be considered even more dated once Chairman Powell speaks Friday during its Jackson Hole symposium.

Wednesday, the major US stock market indexes finished at: DJIA +240.29 at 26202.71, NAS Comp +71.65 at 8020.23, S&P 500 +23.92 at 2924.43

Volume: Trade on the NYSE came in at 669-M/shares exchanged

  • NAS Comp +20.9% YTD
  • S&P 500 +16.7% YTD
  • DJIA +12.3% YTD
  • Russell 2000 +12.0% YTD

HeffX-LTN’s overall technical outlook for the major US stock market indexes Neutral with a Bullish bias in here.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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