Fed-inspired Rally Stalling
After yesterday’s Federal Reserve decision to raise interest rates for the first time in almost a decade fueled a rally, U.S. stocks have fallen today as an energy-sector selloff shaved gains following the interest rate hike.
Thursday, December 17, 2015 - 00:00
This looks like it will snap a current three-day rally, as indices are being dragged down by energy and materials stocks.
There is also some growing concern about junk bond prices and overleveraged energy and mining sectors that may be applying some additional drag to the markets. Junk bond prices are a potential warning sign for stocks. As the number of defaults and downgrades rise to levels last seen in 2009, a deteriorating credit market could pose a threat to U.S. stocks.
Global stocks today surged on Fed Chair Janet Yellen's assurance that further tightening would be gradual and heavily dependent on inflation, which remained firmly below the central bank's 2% target. "The markets have reversed from a higher opening, but that was to be expected after yesterday's surge," said Peter Cardillo, chief market economist at First Standard Financial in New York to Reuters.
As of 1PM EST the three major indices are currently down. The Dow Jones industrial is down 115.28 points at 17,633.81, the S&P 500 down 16.71 points at 2,056.36 and the Nasdaq down 29.91 points at 5,041.23.
Investors will also now keep a closer eye on data to gauge the economy's capacity to withstand higher rates. Data showed jobless claims fell to 271,000 last week, below 275,000 estimated, while third-quarter current account deficit expanded to $124.1 billion, the largest shortfall since the fourth quarter of 2008.
This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.