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End of Day Brief - Wednesday July 28 - Markets mixed / Fed day

Dow34930.93-127.59(-0.36%)
Nasdaq14762.57+102.01(0.70%)
SP 5004400.64-0.82(-0.02%)
10-yr Note -1/321.254
NYSEAdv 2005 Dec 1226 Vol 875.6 mln
NasdaqAdv 3120 Dec 1192 Vol 4.2 bln


Industry Watch

Strong: Communication Services, Energy, Health Care
Weak: Utilities, Real Estate, Consumer Staples


Moving the Market

-- Fed makes no policy changes, as widely expected

-- Fed Chair Powell reiterates expectations for inflation to moderate and says there is still some time until substantial further progress is made on employment goal

-- Mixed earnings reactions in high-profile names

-- Small-caps and micro-caps outperformed


Dow -127.59 at 34930.93, Nasdaq +102.01 at 14762.57, S&P -0.82 at 4400.64

[BRIEFING.COM] The large-cap indices closed mixed on Wednesday, as the market digested mixed earnings reactions in high-profile names and a policy announcement from the Fed that was largely in-line with expectations. Small-cap and micro-cap stocks saw the biggest gains.

The S&P 500 (unch) closed flat while the Dow Jones Industrial Average decreased 0.4%. The Nasdaq Composite outperformed with a 0.7% gain but noticeably trailed the Russell 2000 (+1.5%) and iShares Micro-Cap ETF ($IWC 144.42, +2.40, +1.7%).

Apple ($AAPL 144.98, -1.79, -1.2%), Microsoft ($MSFT 286.22, -0.32, -0.1%), and Alphabet ($GOOG 2727.63, -8.30, -0.3%) headlined the earnings calendar and came through with record-setting quarters. The underwhelming price action, however, harped on concerns that it'll be hard to sustain the same level of growth moving forward and that a lot of the good news has been priced in.

Separately, the Fed made no policy changes, as widely expected, leaving the target range for the fed funds rate near zero and the pace of asset purchases at $120 billion per month. Fed Chair Powell reiterated expectations for inflation to moderate and said there's still some time until substantial further progress has been made towards the Fed's employment goal.

In other words, the Fed will remain extremely accommodative and will continue to watch the incoming data, presumably at least a few more employment reports, until it decides to start tapering asset purchases. This inference boded well for risker stocks while there remained an underlying sense that the S&P 500 was due for some consolidation.

The S&P 500 energy (+1.0%) and communication services (+0.8%) sectors claimed the top spots amid higher oil prices ($72.38, +0.70, +1.0%) and strength in Facebook ($FB 373.28, +5.47, +1.5%) ahead of its earnings report after the close. The Philadelphia Semiconductor Index (+1.8%) keyed off AMD's ($AMD 97.93, +6.90, +7.6%) earnings report.

Conversely, the consumer staples (-0.9%), utilities (-0.7%), and real estate (-0.6%) sectors underperformed in negative territory.

Visa ($V 246.94, -3.99, -1.6%), Boeing ($BA 231.57, +9.30, +4.2%), McDonald's ($MCD 241.78, -4.57, -1.9%), Pfizer ($PFE 43.45, +1.35, +3.2%), and Starbucks ($SBUX 122.41, -3.62, -2.9%) also reported better-than-expected earnings results, but they didn't have that much impact on the broader market.

The Treasury market saw modest selling interest, pushing yields slightly higher. The 2-yr yield increased one basis point to 0.21%, and the 10-yr yield increased three basis points to 1.26%. The U.S. Dollar Index decreased 0.2% to 92.26.

Reviewing Wednesday's economic data:

  • The Advance report for International Trade in Goods for June showed a deficit of $91.2 billion, versus a revised $88.2 billion (from $88.1 billion) in May. The Advance report for Retail Inventories for June decreased 0.3%, while the Advance report for Wholesale Inventories for June increased 0.8%.
  • The weekly MBA Mortgage Applications Index increased 5.7% following a 4.0% decline in the prior week.

Looking ahead, investors will receive the advance estimate for Q2 GDP, the weekly Initial and Continuing Claims report, and Pending Home Sales for June on Thursday.

  • S&P 500 +17.2% YTD
  • Nasdaq Composite +14.5% YTD
  • Dow Jones Industrial Average +14.1% YTD
  • Russell 2000 +12.7% YTD

Source: (Briefing.com)

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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