Fed Leave Rates Unchanged; Stocks Slip
Stocks in the US started off on a positive note, on the heels of a record result for both the S&P 500 and the Dow Industrial Average on Tuesday. Mid-day stocks turned lower, with all three major indices closing down. Robust earnings results along with in line economic data have helped buoy the broader equity bourses. A weaker than expected dollar has also been a benefit to multinational companies who perform better with a more competitive currency.
Today’s FOMC meeting held little suspense for market participants.The weak September jobs data has been followed by soft inflation readings at the producer level which brought forward little risk of any change to the current policy. Market expectations for tapering are being pushed out to the first quarter of 2014 or even beyond. There is no press conference after this meeting, limiting the potential for a market moving event.
Social media stocks have performed well but, LinkedIn (NYSE:LNKD) was hit hard after solid earnings and weak guidance. Management cited robust growth in recent quarters as a factor in its projections, which would represent a slowdown in growth. In Q3, LinkedIn swung to a net loss of $3.4M from a profit of $2.3M last year, EPS came in at $0.39, and revenues jumped 56% to $393 million. After the closing bell, Facebook(NASDAQ:FB) is scheduled to release earnings.
The S&P 500 index reversed course after testing a new all-time high on Wednesday, as the RSI notched up a reading above 70 into overbought territory. Momentum on the S&P 500 remains solid with the MACD (moving average convergence divergence) index printing in positive territory with an upward sloping trajectory. Today’s outside day where the high and low were greater and less than the prior day, could be a sign that the large cap index could correct.
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