Stocks Rally On Fed Taper Guidance

Rich Asplund - Barchart - Thu Sep 23, 9:11AM CDT

What you need to know…

The S&P 500 Index ($SPX) (SPY) this morning is up by +1.03%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +1.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.789%.

U.S stock indexes this morning are moderately higher. U.S. stock indexes are moving higher this morning on positive carry-over from Wednesday when the Fed signaled it is ready to begin tapering bond purchases but said it could still extend stimulus if the economy needs it.

Today’s U.S. economic data was negative for stocks. U.S. weekly initial unemployment claims unexpectedly rose +16,000 to 351,000, showing a weaker labor market than expectations of a decline to 320,000. Also, the U.S. Sep Markit manufacturing PMI fell -0.6 to a 5-month low of 60.5, weaker than expectations of 61.0.

Today’s stock movers…

Cruise line stocks are higher today after Carnival said 8 of its 9 brands had resumed guest sailings and that it is on pace to restart 50% of its fleet capacity by October. Carnival (CCL), Norwegian Cruise Line Holdings (NCLH), and Royal Caribbean Cruises (RCL) are all up more than +2%.

Darden Restaurants (DRI) is up more than +7% today to lead gainers in the S&P 500 after it boosted its full-year comparable sales forecast to +27%-30% from an earlier forecast of +25%-29%.

Biogen (BIIB) is up more than+3% today to lead gainers in the Nasdaq 100 after Beedham & Co. initiated coverage on Biogen with a buy rating and a price target of $400.

Salesforce.com (CRM) is up more than +4% today to lead gainers in the Dow Jones Industrials after it raised guidance on 2022 full-year revenue to $26.25-$26.35 billion from a prior forecast of $26.2-$26.3 billion.

Across the markets…

Dec T-notes (ZNZ21) this morning are down -9 ticks, and the 10-year T-note yield is up +5.8 bp at 1.358%. Strength in stocks today is curbing the safe-haven demand for T-notes. Another bearish factor is supply pressures as the Treasury will auction $14 billion of 10-year TIPS later this afternoon. T-notes also fell back on negative-carry-over from Wednesday’s FOMC meeting where the Fed said its pace of bond-buying "may soon be warranted."

The dollar index (DXY00) this morning is down -0.34%. A rally in stocks has curbed the liquidity demand for the dollar. Also, an unexpected jump in U.S. weekly jobless claims today weighed on the dollar. EUR/USD (^EURUSD) is up +0.38% on weakness in the dollar. The euro rose today despite negative economic data that showed the Eurozone Sep Markit manufacturing PMI fell -2.7 to a 7-month low of 58.7, weaker than expectations of 60.3. USD/JPY (^USDJPY) is up +0.31% at a 1-week high as higher T-note yields today weakened the yen. Also, strength in global equity markets today has reduced the safe-haven demand for the yen.

December gold (GCZ21) this morning is down -24.6 (-1.38%), and Dec silver (SIZ21) is down -0.347 (-1.517%). Precious metals this morning are moderately lower. Metals prices are under pressure today from Wednesday’s FOMC meeting when the Fed said, "the economy and employment have continued to strengthen," and its pace of bond-buying "may soon be warranted." Gold prices fell back further today as T-note yields rose.

Stocks Rally On Fed Taper Guidance (barchart.com)