1. Moving the Markets
Heading into decision day for the Fed, skeptics warned that an increase in rates could cause market volatility and upheaval. Well, the exact opposite happened today as it seems that Wall Street bulls viewed the Fed’s rate hike as a sign of an improving economy. The question in my mind is as to whether this euphoric reaction represents simply a relief rally or the continuation of the bullish trend. We’ll have to be patient and give it a little time to see if upward momentum can be maintained.
The Fed delivered the news in a policy statement, which read: “Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 0.25% to 0.50%”.
Wall Street also got the forward guidance it wanted to so hear on the pace of future hikes in 2016: “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases,” the statement read. The key word, of course, was “gradual.”
In oil news today, we heard that congress reached a deal late Tuesday on a $1.1 trillion spending bill that would end the four-decade-long ban on most U.S. exports of crude oil. Facing plunging revenue and profits, U.S. oil and gas companies have announced 250,000 layoffs this year, according to a November report by consultant Graves & Co. that was cited by Bloomberg. The fact that U.S. producers may finally be allowed to sell unrefined crude oil to foreign customers is a welcome development to the industry but hardly a boon to the bottom line.
All of our 10 ETFs in the Spotlight headed higher as the rebound continued. Consumer Staples (XLP) led with +1.93%, while the Mid-Cap Value (IWS) lagged but still gained +1.21%.
The US economy is likely going to be in the backdrop of a flatter yield curve for quite some time because the Fed is going to be raising rates, but they are going to be telling the markets that their end game is probably much lower than where they thought it was, said Ellen Zentner of Morgan Stanley.
Taking a plunge into the healthcare sector when it’s fighting with a huge image problem requires courage. Moreover, when the investment product targets the biotech sector – which recently witnessed a big sell-off amid a raging drug-pricing controversy, questions are bound to be raised about the timing.