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Stocks Shoot Higher Following Fed Announcement

Oil continues to pull back, while gold edges higher

by 6/18/2014 4:18:27 PM
Stocks quoted in this article:

All eyes were on the Federal Open Market Committee (FOMC) today, but central bank leaders had limited surprises for market participants. Tapering is set to continue at a steady pace, and interest rates remain parked at historical lows ... though not forever. After hovering close to the breakeven mark for most of the trading day, the Dow Jones Industrial Average (DJI) popped higher following the FOMC announcement, while the S&P 500 Index (SPX) notched a record closing high.

Continue reading for more on today's market, including:

  • Adobe Systems Incorporated (NASDAQ:ADBE) shot to a record high, thanks to a solid second-quarter earnings report and subsequent round of bullish brokerage notes.
  • Find out which home furnishings company was among the day's biggest losers.
  • Ahead of tomorrow's earnings release, BlackBerry Ltd (NASDAQ:BBRY) struck a deal to make apps more available to its customers, and traders responded by placing bullish bets.
  • Plus ... The Fed surprises no one, FedEx Corporation (NYSE:FDX) tops estimates, and Ford Motor Company (NYSE:F) attracts bullish bettors.
Trading Topic of the Week -- Reasons to Dodge Directional Risk: Take the pressure off your directional forecasting skills. If the stock looks poised for a big breakout -- but it's hard to tell which way the bull/bear scales are going to tip -- a straddle allows you to hedge your bets.

The Dow Jones Industrial Average (DJI - 16,906.62) zoomed sharply higher into the close, adding 98.1 points, or 0.6%. With this jump, the blue-chip index retook control of its 10-day moving average and came within 65 points of its all-time high. All but two of the Dow's 30 components moved higher today, paced by The Coca-Cola Company (NYSE:KO), which gained 1.6%. Microsoft Corporation (NASDAQ:MSFT) and Intel Corporation (NASDAQ:INTC) brought up the rear with losses of 0.1%.

The S&P 500 Index (SPX - 1,956.98) exhibited a similar show of late-day strength, gaining 15 points, or 0.8%. The index also closed at a new high and tagged a fresh intraday peak of 1,957.74. The Nasdaq Composite (COMP - 4,362.84) wasn't left out of the fun, rallying 25.6 points, or 0.6%, by the close, putting in its highest closing level since April 2000.

The CBOE Volatility Index (VIX - 10.61) tagged a new intraday low of 10.57 -- its lowest reading since February 2007 -- before closing off 1.5 points, or 12%, on the day.

CLOSING SUMMARY  INDICES

CLOSING SUMMARY  NYSE AND NASDAQ

A Trader's Take:

"The FOMC had no major changes to its open market policy and remains transparent with its plans to reduce the bond buying each month," noted Schaeffer's Trading Analyst Peter Bryans. "Fed Chair Janet Yellen stated there continues to be underlying economic improvement, and that the committee will adjust policy as necessary. The market rallied on this news, heading higher into the closing bell. Tomorrow, the only major data point on the economic calendar is weekly jobless claims, considered another 'leading indicator' of unemployment."

5 Items on Our Radar Today:

  1. As largely expected, the Federal Reserve continued to pare its asset-buying efforts, tapering monthly purchases by another $10 billion to $35 billion per month. The central bank also held interest rates steady and lowered its full-year gross domestic product (GDP) outlook to a 2.1% to 2.3% range, from earlier projections of 2.8% to 3%. (CNBC)
  2. Federal Reserve Chair Janet Yellen addressed reporters following the policy statement. Among the highlights, she opined that inflation is too low -- but gradually approaching the central bank's 2% target -- and unemployment is too high. She also remarked about the low volatility in the markets, and said that the economy should continue to grow, fueled by rising home prices, easing credit conditions, and other factors. (The Wall Street Journal)
  3. FedEx Corporation (NYSE:FDX) reported fiscal fourth-quarter earnings and revenue that came in above analysts' estimates. Company officials attributed the solid results to strength in its ground shipping unit, which was prompted by a surge in e-commerce. In other news, the shipping giant upped its quarterly dividend payout by 5 cents per share to 20 cents. (Forbes)
  4. Short-term speculative bulls are targeting a pop higher in Ford Motor Company (NYSE:F) shares by the end of the week.
  5. Call buyers flocked toward Autodesk, Inc. (NASDAQ:ADSK) as the stock surged on sector-related news.
EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

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