MARKET WRAP – STOCKS JUMP ON FED DECISION

Down ticks have been disallowed on all Wall Street as stocks simply refuse to go down on any news.  Stocks were up 0.75% today on the Fed decision.  The market has a palpable feeling of invulnerability.  Despite being widely anticipated, bullish investors were eager to snatch up stocks following the Fed meeting.  The impressive (bordering on unbelievable) statistics continue to pile up over the course of this melt-up:

• The rally is now 27 sessions long.
• There have been only two 1% down days during the entirety of the recent rally.   The other sell-offs have been marginal at best and have been characterized by buying the dip.
• The VIX is down 40% from its peak and down 20 of the last 27 sessions.
• The Russell 2,000 is up 17% and has fallen on just 5 days in the last 27.
• Bank stocks are up 23 of the last 27 sessions for a total return of 16.5%.

Not surprisingly, sentiment has done a 180 in recent weeks and leaves me wondering just who are the bears (or neutral investors) that are going to fuel the near-term continuation of the move.  It’s likely that sentiment will set another high this week as more and more investors jump on the bull bandwagon?

Breadth rebounded on the day at a margin of 2:1 as the dollar sank and commodities, materials and tech stocks led the move higher.  Rumors of a positive earnings pre-announcement from Intel had the semis rallying over 2% on the day.  Volume was very light for a Fed day.   Investors appear to have S&P 1200 in their sights and with this dead sprint into risk assets we might just get there before the end of the month.

From Daily Futures:

U.S. Economy
The Federal Reserve met today and kept the federal funds rate unchanged at .125%, as expected. They continue to say that economic conditions “are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” The June 2011 eurodollars finished up .065 at 98.49.

The U.S. Census Bureau said that housing starts were at an annual rate of 575,000 in February, down 5.9% from January’s pace, but up .2% from a year ago. May lumber was down .0060 at $272.40.

Grains and Cotton
Today’s U.S. Palmer Drought Map shows extremely moist conditions throughout the central U.S. (see map among today’s articles). May corn ended up 3.5 cents at $3.667.

May cotton finished up 1.08 cents at 81.84, helped by today’s weaker U.S. dollar.

Sugar
Sugar prices continue to fall, to the surprise of many. May sugar closed down 1.15 cents at 18.24, the lowest close in nearly eight months.

Energies
OPEC meets in Vienna tomorrow. Since current prices are favorable to producers, no change is expected in their production quotas. May crude oil closed up $1.89 at $81.97.

Metals
Just when it looked like the metals were weakening, April gold closed up $17.10 at $1,122.50, helped by talk of a European plan to help Greece and the Fed’s ongoing commitment to keep the federal funds rate low.

Currencies
Officials from the European Union said late yesterday that they have a plan for providing financial aid to Greece, if needed. The specific amounts are not yet known (see article). The June euro closed up .0084 at $1.3757.

Statistics Canada said that manufacturing sales were up 2.4% in January to C$44.6 billion, the fifth consecutive gain. Also, productivity was up 1.4% in the fourth quarter, the first gain in over a year. The June Canadian dollar closed up .53 at a new contract high of 98.55.

Consumer prices in the EU-27 were up 1.4% in February from a year ago, down from a 1.7% annual gain in January.