STOCKS BOUNCE ON FED'S INTENTION TO RAISE RATES GRADUALLY -- BONDS BOUNCE ALONG WITH REITS AND UTILITIES -- CONSUMER STAPLES SPDR BOUNCES OFF 200-DAY LINE -- DOLLAR DROP BOOSTS GOLD
STOCKS EXPERIENCE MODEST BOUNCE... Large cap stocks experienced a modest bounce on today's Fed statement about raising rates very gradually. Chart 1 shows the S&P 500 gaining four points (+0.20%) and ending just below its 50-day average. Small caps, which had been testing spring highs, ended lower (Chart 2). Bonds bounced on the Fed announcement along with rate-sensitive groups like utilities and REITS that pay dividends. That also helped the Consumer Staples SPDR (XLP) bounce off its 200-day line (Chart 3). A pullback in bond yields weakened the dollar which gave a boost to gold (Charts 4 and 5). Rate-sensitive emerging markets also bounced. These were knee-jerk reactions to the Fed statement. It remains to be seen if there's any follow-through over the rest of the week. Markets are also watching developments in Greece very closely.
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Chart 1
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Chart 2
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Chart 3
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Chart 4
