briefly

Today's Change: +73.88 +(0.67)
Open: 11,091.15
Prev Close: 11,094.43
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Day High: 11,183.04
Day Low: 11,085.38

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3 hr 8 min ago

[BRIEFING.COM] Despite the FOMC minutes offering little clarity on the interest rate outlook, a sense that the market is oversold on a short-term basis, as evidenced by some end-of-the month portfolio rebalancing, helped the major averages close near session highs. However, it remains to seen if today's reflex rally will be sustainable as the axiom "sell in May and go away" held true as stocks bounced back following Tuesday's drubbing but still turned in one of their worst monthly performances in years.

With the market still reeling since the Fed last raised interest rates on May 10th, investors were somewhat optimistic throughout the session about the Fed's comments discussing a possible pause with its tightening. Nevertheless, since the minutes clearly reflected uncertainty and disagreement on the part of members as to what the future will bring, as the range of discussion bordered a possible no hike to as much as a 50-basis point increase, the slightly higher degree of concern about inflation raises the risks that the Fed will find the need to keep raising rates.

To wit, fed funds futures are now pricing in more than a 70% chance for the first time since late April of a 1/4% rate hike in late June. Bond traders were also less optimistic about what Fed officials had to say about inflation pressures and a potential pause, as the yield on the 10-yr note crept up 6 basis points from session lows to 5.11% -- the highest closing level since mid-May.

Aside from oversold conditions attracting bargain hunters, Secretary of State Condoleezza Rice referencing a move toward diplomatic talks between the U.S. and Iran helped alleviate some of the ongoing nervousness about Iran's nuclear ambitions and subsequently weighed on oil prices. Crude oil futures were off as much as 2.5% at one point and almost pushed through the psychological $70 a barrel level; but crude rallying into the close to finish off just 1.0% at $71.15 a barrel helped Energy regain some momentum, provide some influential leadership as the day's best performing sector (+2.0%) and lent credence to the idea that recent consolidation was overdone.

Further questioning the leadership and sustainability behind today's bounce, though, was the fact that the other strong performances came from the least influential sectors like Materials, Utilities and Telecom. Financials and Technology -- the two largest contributors to the total weighing on the SnP 500 -- were negative with an hour left to go before regaining enough momentum to close modestly higher.
NYSE Adv/Dec 2387/879...Nasdaq Adv/Dec 1985/1067