Fed Day Weakness is Something Investors Aren't Used To Bespoke publishes an in-depth look at the market's historical performance on Fed Days prior to each FOMC meeting. One of the things we note each time is how well the S&P 500 has historically done on Fed Days since 1994 when the Fed began announcing its policy decisions on the same day as its meetings. (Prior to 1994, the Fed's decisions were not released immediately, so the stock market did not have any Fed news to react to on meeting days.) Historically, the S&P has averaged a one-day gain of nearly 30 basis points on Fed Days. That's 10x as strong as the average one-day change of 0.03% that the S&P has experienced on all trading days throughout history. But gains on Fed Days have been few and far between lately. Below we show the average one-day change for the S&P 500 over the last 10 Fed Days, and we roll the 10 Fed Day reading back to 1994. As shown, the current average one-day change of -0.30% for the S&P over the last 10 Fed Days is very negative by historical standards. There have only been two prior periods (early 2001 and early 2006) where the average was lower than it is now. The 10 Fed Day average for the S&P is not being weighed down by just one or two extremely negative one-day moves. In fact, the S&P has declined on nine of the last ten Fed Days! As shown below, there has never been a prior 10 Fed Day period where the S&P declined on at least nine of those days. And coincidentally (?), 10 Fed Days ago was when Fed Chair Powell first took the helm! As we noted in today's Morning Lineup ahead of the open, Powell is going to have to break out of this rut at some point! Fed Days by Month Below is a look at the S&P 500's performance on Fed Days by month since 1994 when the Fed began announcing its policy decision on FOMC meeting days. June Fed Days have typically seen muted returns, with the S&P averaging a small gain of just 0.06%. June is actually the second worst month of the year for Fed Days behind only February, which is the only month that has seen the S&P post negative Fed-Day returns (-0.30%). In terms of consistency to the upside, June is the worst month for Fed Days with the S&P seeing gains just 40% of the time. April Fed Days, on the other hand, have been the most consistently positive with gains 75% of the time. June Fed Days have also seen low volatility relative to other months. The average absolute one-day change for the S&P on June Fed Days has been +/-0.61%, which is tied with February as the third lowest vol month for Fed Days. August and March Fed Days have historically been the most volatile with average moves up or down 1%+.
Well initial reaction is pretty positive for the market, we will see what happens when Powell starts speaking
The median projection was for no change in 2019, but that is a bit misleading. The dots show a sharply divided Fed, with eight officials penciling in one or two interest rate cuts this year, while nine thought policy would remain unchanged. https://www.marketwatch.com/story/f...-in-shift-away-from-patient-stance-2019-06-19 So 8 officials think there will be at least a cut this year and 9 think no cut, I guess good enough for the market since it is a very close call
^^ yep as i thought yesterday the actual "announcement" was setting up to be a nonevent (which appears to have been ) but now we see what powell has to say once he steps to the podium i think if there was no powell presser today then we probably stay range bound into the close, but we could see some interesting price action with powell speaking...we will see soon. let's see what kind of verbiage we hear from powell that might or might not spook the market
Looks like the FED was just dovish enough to push interest rates and the dollar lower G20 is the next big event, my guess is both Trump and Xi will say things that the market will like but we won’t get a trade deal
2-year interest rates down a lot today, almost 12 bps from 1.87%. Actually makes the 2y-10y curve steeper. So seems like dissatisfaction with short term issues.
i guess absent a black swan event from now and until the end of summer we'll be largely range bound. not really a whole heck of a lot of catalysts to drive things for the exception of maybe earnings season. maybe a sleepy market for the next couple of months
Yep haha, summer is coming up and volume probably will be kinda low. I think the dovish FED probably is putting a pretty nice floor for this market unless all of the sudden we are getting some really bad economic data
Dividend sectors like utilities, consumer staples, and real estates had a nice spike after the FED, and they probably will continue to do pretty well if interest rates remain low
Volatility lives in Trump's twitter account. As long as he's on Twitter, we don't have to wait for the usual "movers of the market".
Nice Day for Emerging Markets US equities surely liked what they heard from the FOMC on Wednesday, but Emerging markets cheered the comments even more. Starting with the group as a whole, the Emerging Markets ETF (EEM) rose 0.8% and closed above its 50-DMA for the first time since May 3rd and also looks to have broken above some short term resistance as well. Down in Brazil, the benchmark Ibovespa index also saw a similar move closing at a record high and above 100,000 for the first time in its history. On a dollar-adjusted basis, the Brazilian benchmark still remains well off its recent highs, but it does look to have broken its downtrend from its highs in early February. No one like easy money more than emerging markets and this week's moves from global central banks has been music to their ears.
10-year Treasury yield drops below 2% for first time since 2016 The yield on the benchmark 10-year Treasury note fell below 2% for the first time since November 2016 on Wednesday — breaching a key psychological level. The policymaking committee of the Fed also dropped the word “patient” from its statement, a sign interpreted by some investors as a hint that the central bank hasn’t abandoned the idea of a rate cut in 2019. https://www.cnbc.com/2019/06/19/us-...-investors-await-federal-reserve-meeting.html
Ive been heavy ute's and reits all year, and thinking of doubling up again... good low interest plays, and two of the only three sectors not affected by trade at all
Market Indices $SPY$DIA$QQQ and Market Sectors $XLK$XLC$XLY$XLP$XLF$XLV$XLE$XLI$XLB$XLU opportunities for buying and selling (6/19/2019). If you want to know more in detail about these ETFs and our stock suggestions, please check out our JusTrading's closing bell video for today. ()
