Wednesday, May 24, 2017
Subscribe Successful Calls Model Portfolio Login Free Trial Feedback About Us FAQ Links

Market Digest Online Banner

[Most Recent Quotes from]
[Most Recent Quotes from]

Market Digest Online THURSDAY, MAY 25, 2017: U.S. equities closed higher on Wednesday as investors cheered the Federal Reserve's plan for scaling back its massive $4.5 trillion balance sheet. The central bank sees a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting, according to the minutes from its May 3 meeting. Any amount it receives in repayments that exceeds the cap limit will be reinvested.

"The Fed provided more clarity here," said Matt Toms, chief investment officer of fixed income at Voya Investment Management. "They're implying the ability to modulate their balance-sheet reduction plan. It shows the Fed is not on auto-pilot and that they can adopt as needed."

The S&P 500 gained 0.25 percent, as real estate led advancers, to post a record close. The Dow Jones industrial average rose about 75 points, with Goldman Sachs contributing the most gains. The Nasdaq composite advanced 0.4 percent.

"Although they indicate that they want to trim the balance sheet, they're not locking themselves into a particular path," said Daniel Deming, managing director at KKM Financial. "That's why the market reacted positively to the minutes.

Historically, stocks have mostly posted gains on days when the Fed releases minutes since Janet Yellen became chair, according to Kensho. On average, the S&P 500 has gained 0.28 percent on those days, with health care, consumer discretionary and materials outperforming, Kensho data showed.

The Fed held off on raising rates earlier this month but most investors are expecting the central bank to hike again at its June 14 meeting. Market expectations for a June rate hike are 83.1 percent, according to the CME Group's FedWatch tool.

In other economic news, total mortgage application volume increased 4.4 percent last week on a seasonally adjusted basis from the previous week thanks largely to refinancings. Existing home sales slipped 2.3 percent in April, more than expected.

"There are two pillars in the market right now. First, earnings were good. You can knock it any way you want but the earning season was good," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. "The second is this ying-yang data. As long as we continue to get mixed data, we will likely stay in this trading range."

© Copyright 1998+ Market Digest Online, Inc. All Rights Reserved