There was a wall of upward movement in the markets around 11:15 today when FED Chairman Ben Bernanke released a note that was sent to Rep. Darrel Isaa, who is the chairman of the House oversight committee, discussing how the FED still has the ability and room on the balance sheet to further support the economy.
This in essence is just the same old line the FED has been using but reiterated again. Of course the sugar addicted market jumped on the note as hope the central bank will indeed further QE. The jump is easily seen in the chart for today’s DOW movement:
DOW Today Chart:
In truth we won’t really have a good idea of what the FED has planned until the Kansas City FED’s annual symposium which will be held next week in Jackson Hole, Wyoming. Most likely we’ll just get more of the same “ready and able to act”. After we get the August jobs report we’ll all know a lot more. A bad number in August could force the FED’s hand. However, lately we’ve been getting economic data that is just good enough not warrant further stimulus. Today Durable goods orders report came out and orders rose 4.2% in July which was more than a 2.5% increase from what economists where expecting.
The Dow (INDU) jumped 100.51 points at 0.77%. The Nasdaq (COMP) gained 16.39 points at 0.54%. And the S&P 500 (SPX) rose 9.05 points at 0.65%.
Oil fell 11 cents to close at $96.15 a barrel
On a day when markets rallied on QE hopes it was a bit surprising to see Gold fall $1.80 closing at $1,671 an ounce (which might just tell you that the market really doesn’t believe we’ll get QE from the US, keep in mind Gold is priced in Dollars which is why its so tied to QE).
The 10-Year Note yield held steady at 1.68%.