Stocks finished decidedly higher on Wednesday, snapping a three-session long move sideways. Major indices opened the session lower following word that the IMF had called for the ECB to take a hit on the €40 billion in euros that it holds. Recall that private bondholders are holding negotiations currently over the write-downs, though public holders like the ECB are not obligated to take write-downs. Nevertheless, the news caused some uncertainty and drove stocks down early on.
Stocks would stabilize rather quickly, and much like this week’s previous two sessions, rally through the early morning. A lower than expected but still positive trending Pending Home Sales report and a better than expected FHFA House Price Index helped underpin the morning rally.
Stocks got a major boost in the early afternoon after the FOMC statement was released. The statement said that the FOMC planned to leave rates unchanged, but also announced that it would leave rates “exceptionally low through at least 2014.” Low rates prove good for stocks, but may signal worries ahead for the economy.
After the release, the bulls would take firm control and push major indices up all afternoon and into the close. Ben Bernanke’s press conference was relatively uneventful, though he did say that the Fed would undertake further quantitative easing if necessary, meaning that QE3 is at least not off the table yet. Stocks finished just off intraday highs following a selloff into the close, but still posted relatively large gains for a January 2012 session.
Wednesday’s session was another intraday victory for the bulls, only this time, they were able to move major indices higher (rather than finishing even). Looking ahead to the end of this week, we have Initial Jobless Claims, Durable Goods, New Home Sales, and LEI on Thursday, and a very important U.S. GDP figure on Friday.
Close Recap: S&P 500 +0.87%, NASDAQ +1.14%, DJIA +0.66%, Midcaps +1.02%.
Have a pleasant evening.
S&P 500 - Intraday
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