"The Fed's decision to taper caught many by surprise," observed Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "The thinking was that with the economy still on weak footing -- and this being Ben Bernanke's last central bank decision as Fed chairman -- the odds were in favor of pushing the decision to taper until next year." Nevertheless, the Dow Jones Industrial Average (DJI) soared on news of the $10 billion scale-back, and reclaimed the 16,000 level.
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The Dow Jones Industrial Average (DJI - 16,167.97) flirted with breakeven for much of the day, but surged following the Fed's tapering announcement. By the end of the session, the blue-chip index was up 292.7 points, or 1.8% -- marking a record closing high. The Dow's 29 advancers were once again led by 3M Co (NYSE:MMM) -- which gained 3.4% -- while a 0.3% drop for The Boeing Company (NYSE:BA) marked it as the sole decliner.
The S&P 500 Index (SPX - 1,810.65) experienced similar price action, and finished 29.7 points, or 1.7%, higher -- notching an all-time closing high of its own. Meanwhile, the Nasdaq Composite (COMP - 4,070.06) advanced 46.4 points, or 1.2%, for the session.
Elsewhere, the CBOE Volatility Index (VIX - 13.80) plummeted after the Fed update, and closed 2.4 points, or 14.9%, lower.
A Trader's Take:
"The general consensus was that a decision to taper would bring with it a massive jolt of volatility, and probably lower prices," Detrick noted. "Sure, this is very early, but the initial reaction has been just the opposite. Volatility has imploded, and the bulls have taken charge. This is another reminder that following the crowd can be a dangerous game."
5 Items on Our Radar Today:
For a look at today's options movers and commodities activity, head to page 2.
Recent XIV Action May Bode Well for Bulls
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