Market Summary: The long & the short of it.
Despite the avalanche of earnings releases being published for the third quarter, the attention of the market participants shifted to the Federal Reserve and its Chairman Jerome Powell. The Fed did indeed meet the expectations of the markets (all the action being priced in) and cut its Fed Funds interest rate another 25 basis points or 0.25 % to 1.75%.
In typical Orwellian “fed-speak“, Chairman Powell managed to sound both dovish and hawkish in the same press release. We expect a torrent of tweets tomorrow from the White House directed at the federal reserve, some victory laps, and a ratcheting up of the pressure on the fed to cut again in December.
The markets rewarded the fed Chairman, by bidding up the S&P 500 by 9 points, to end the day at 3064 for a gain of 0.33%. The New York Composite (NYA) was a little less appreciative and finished its trading session at 13224 for a post fed gain of 0.26%.
The EIA reported a big Crude Oil inventory build, confirming the recent API report. Crude Oil (WTI) was weak in trading, inventory pressure putting a downward tilt on the price. Oil ended the day below $55 a barrel.
Gold tumbled after the drop in interest rates, then hit the brakes and reversed hard on Chairman Powell’s comments, pushing gold back towards $1500 to end the day at $1498 and a gain of 0.21%. Gold’s little brother silver mimicked the action of big brother gold and ended the day at $17.80 an ounce and a gain of 0.27%.
Treasury yields were lower on the day and indeed lower for the week. The 10- year yield ended the day at 1.79%.
Asian markets rose yesterday as Chinese and Hong Kong shares showed gains. The Chinese Shanghai Composite was up 0.44% while the Hong Kong Hang Seng increased by 0.89%. The Japanese Nikkei 225 was not trading.
European markets finished mixed as of the most recent closing prices. The French (CAC 40) gained 0.45% and the UK’s (FTSE 100) rose 0.34% and the German (DAX) lost 0.23%.
In spite of the markets going nowhere, the fear gauge (VIX) CBOE Volatility Index dropped by 6.5% to end trading at 12.33.