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Dow Hits All-time High Following Fed Announcement

David Becker
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Dow Hits All-time High Following Fed Announcement

Following Wednesday’s Fed announcement that basically kept everything as is, the Dow Transports hit another record high and remains the strongest of the three Dow averages. Wednesday’s rally was led by rails and delivery services. FedEx (NYSE:FDX) gained 3.5% to lead the latter group higher. The Dow Industrials finally hit a new record high as well. Thursday’s upside breakout by the industrials confirms the earlier bullish breakout in the transports. The Dow’s rally was led by a 4.9% jump in DuPont. Other Dow leaders were Home Depot, and Goldman Sachs. The Dow Utilities is lagging behind the other two Dow averages.

Financial stocks were among the day’s biggest leaders. The Financial SPDR (XLF) moved to a new multi-year high. Banks were a big part of today’s financial gains. The PHLX Bank Index (BKX) hit a new six-month high.

A big jump in Lennar’s (NYSE:LEN) earnings pushed that stock sharply higher and all other homebuilder along with it. Lennar (LEN) surged more than 5% and in very heavy trading. That puts the homebuilding leader well above moving average lines. The Dow Jones Home Construction (iShares) climbing above its 200-day moving average as well.

Although today’s Fed announcement did not really change anything, the financial markets continued to anticipate higher U.S. rates. The 5-Year Treasury Note Yield climbed close to its yearly high. The 10-Year T-Note yield also bounced. The widening spread between U.S. and foreign yields continues to support the dollar.

The Dow Industrials hit an all-time high, as momentum turned positive. The MACD (moving average convergence divergence) index generated a buy signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crossed above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.

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