Stocks opened lower and investors were hunkering down expecting the worst before the FOMC policy statement was released. Upon the announcement, a triple digit loss in the Dow turned into a 227-point gain. After the announcement, Janet Yellen held a press conference and pushed all of the right buttons as stocks held onto those gains into the close.
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The S-fund made new highs with their 1% gain, and with the help of the dollar tanking about 2%, the I-fund exploded to a 2.58% gain. Bonds were also up impressively.
The Fed did take the word "patient" out of the policy statement when it came to interest rate hikes, as many expected, but Yellen added in the press conference that taking out "patient" didn't mean they were going to be impatient. She knows just what to say to keep the market happy.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) made a new all-time high yesterday but lagged slightly as the large caps had been held back by the strong dollar, which snapped back yesterday so inventors jumped on the larger stocks. It is nearly hitting overhead resistance, which is rising, and I can see it trading within the black circle for a little while.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) gained over 2% as it was able to take advantage of the gains in U.S. stocks, plus it got the added benefit from the sharp decline in the dollar. As we talked about yesterday, the "bear flag-like" formation did respond the way it did at the January lows. For the first time since October, the 50-day EMA is now above the 200-day EMA.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
And here's what the Fed announcement did to the dollar - and why the I-fund did so well...
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) rallied on the "not impatient" comment from Yellen. We have direction, but it is nearly at some possible overhead resistance already.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Bonds yields fell after haven risen in anticipation of rate hikes potentially coming in April, but that doesn't seem to be the case now. Back down they went.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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