[Chart courtesy of MarketWatch.com]
Worry returned to Wall Street today, a day after stocks surged to record highs following the Federal Reserve’s decision to continue its stimulus of the economy. The S&P 500 Index and the Dow 30 both retreated, while the Nasdaq gained ground, as traders contemplated a plethora of positive U.S. economic reports.
Meanwhile, gold had its biggest one-day jump since the onset of the financial crisis in September 2008. Despite relatively narrow trading ranges, today’s session saw above average participation. Investors are now struggling to figure out if the Fed’s decision to delay any pullback in stimulus is a signal that the economy is weaker than previously thought.
Stocks spent the entire session in a slow retreat off their opening levels. Seven of ten sectors finished in the red while industrials (+0.1%), technology (+0.2%), and discretionary shares (+0.01%) posted modest gains. The discretionary sector received support from retailers as the SPDR S&P Retail ETF added 0.2%. Meanwhile, homebuilders lagged across the board as rates trended higher. The iShares Dow Jones US Home Construction ETF fell 1.2% after jumping 4.8% yesterday.
Also of note, the technology sector ended modestly higher. On the earnings front, Oracle added 0.1% after reporting a bottom-line beat on below-consensus revenue. In addition, the company guided its second quarter earnings and revenue on the low end of consensus expectations. The outperformance of technology kept the Nasdaq in positive territory through most of the session.
However, biotechnology held the index back from additional gains as the iShares Nasdaq Biotechnology ETF ended little changed. Countercyclical sectors lagged across the board as consumer staples, health care, telecom services, and utilities lost between 0.3% and 0.5%. Elsewhere, treasuries saw pressure following economic reports.
Existing home sales surprisingly rose to a 6 year high as buyers rushed to lock in interest rates before they rise further. Manufacturing in the Philadelphia region expanded in September at the fastest pace since March 2011, a sign factories are picking up momentum. Among other reports, the Conference Board’s index of leading economic indicators increased 0.7 percent in August.
The U.S. economy will expand 1.6 percent this year, at the slowest pace since the recession allegedly ended in 2009, and grow by 3 percent in 2015, according to many economists.
Our Trend Tracking Indexes (TTIs) pulled back slightly and closed the day at +3.88% (Domestic TTI) and +8.63% (International TTI).