By InTheMoneyStocks.com on February 19th, 2010 8:53am Eastern Time
After a surprise hike in the discount rate to .75% by the fed, the markets have rallied back strongly. Futures overnight on the S&P 500 were down over 12 points but now just sit down 4 points. After the announcement yesterday, the SPDR S&P 500 ETF (NYSE:SPY) was below $110.00 but is now hovering prior to the markets open down just $0.36 to $110.55.
The key to the comeback has been the soothing statements from various federal reserve officials and analyst, urging the markets this is not a new period in the markets where massive tightening will start. In addition, the CPI (consumer price index) was released. After the PPI came in much hotter than expected and could have helped the Federal Reserve raise the discount rate, the CPI came in cooler than expected. The CPI was announced at a gain of .2% but if you strip out food and energy, it actually dropped .1%. After the harsh PPI (producer price index yesterday), showing inflation at the producer level, the CPI has relaxed Wall Street.
The Federal Reserve move has pushed the dollar higher today. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading higher pre market to $23.84, up $0.19. That is also putting a little pressure on oil, iPath S&P GSCI Crude Oil Total Return (NYSE:OIL) and gold, SPDR Gold Trust (ETF) (NYSE:GLD).
The presser on the markets was not only due to the Federal Reserve raising the discount rate by a quarter point, but also due to Dell Inc. (NASDAQ:DELL). Dell reported earnings that simply did not perform as well as Wall Street expected overall. The stock is being hit today. This will put a little extra pressure on technology shares today.
Overall, the markets have rebounded sharply from their overnight losses. The markets look to open just slightly lower on the day at this point. Stay tuned for more updates.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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