Stocks negated Monday's trek into the red, as a weaker dollar ahead of the Federal Reserve's policy statement sparked a rebound in commodities. More specifically, the greenback lost ground against most of its foreign rivals, as investors await the Federal Open Market Committee's (FOMC) interest rate decision tomorrow. The central bank is widely expected to maintain rock-bottom rates near zero, with the official statement slated to hit the Street at 2:15 p.m. Eastern. Meanwhile, a plethora of positive earnings reports and a rebound in the financial sector were also boons for the bullish bandwagon today, with all three major market indexes finishing on the north side of breakeven.
The Dow Jones Industrial Average (DJIA 9,829.87) bolted into the black right out of the gate this morning, eventually settling on a gain of 51 points, or 0.5%. Twenty of the Dow's 30 blue chips chugged higher, led by JPMorgan Chase (JPM) and Caterpillar (CAT). Leading the 10 laggards were Home Depot (HD) and Merck (MRK). Technically speaking, the Dow is poised to close its second straight week atop its 80-week moving average a feat not accomplished since January 2008.
The S&P 500 Index (SPX 1,071.66) fared the best of the three major market indexes, adding 7 points, or 0.7%, by the closing bell. In parity with its blue-chip brethren, the SPX is also positioned to close a second straight week atop its own 80-week trendline. Finally, the Nasdaq Composite (COMP 2,146.30) extended its winning streak to four consecutive sessions, advancing 8.3 points, or 0.4%. The tech-rich index is fast approaching the 2,200 region, which played the part of support during most of 2008.
Turning to equities in focus, Palm, Inc. (PALM) tagged a new high thanks to early merger-and-acquisition chatter ... The Option Coach dissected the ins and outs of protective puts ... Short sellers rushed to cover as Melco Crown Entertainment Ltd. (MPEL) powered higher ... Research In Motion Limited (RIMM) was the target of a pre-earnings credit spread ... Andrea Kramer examined a theoretical covered call on Suntech Power Holdings (STP) ... and today's Quote of the Day comes from Bruce Bueno, 54. The economic downturn has had a negative impact on most Americans and, for the first time in 40 years, has even discouraged would-be immigrants from making the journey to the land of the free. According to Tucson resident Bueno, who has friends and family in Mexico, facing the perils of the Sonoran Desert to cross the border may no longer be worth the risk:
"It's just too expensive. Might as well just stay there."
But these weren't the only headlines hitting the Street today. Click on the links below for our Daily Option Blog coverage of:
And, in case you missed it, Andrea Kramer noted the importance of studying a stock's sentiment backdrop in this week's edition of The Fundamentals of Trading. Click here to watch the video.
For today's activity in crude oil, gold futures, options, and more, turn to page 2.
Crude futures clawed their way back above the $70-per-barrel level today, as the U.S. dollar weakened ahead of the FOMC's policy statement. The greenback tagged a new 52-week low against the euro, as investors bet the central bank will keep interest rates relatively steady. Furthermore, black gold got a boost from supply-related concerns, after Saudi Oil Minister Ali Naimi told The Wall Street Journal that the global economy hasn't recovered enough to warrant an increase in production. By the close, October-dated crude added $1.84, or 2.6%, to finish at $71.55 per barrel.
Gold futures snapped a three-session losing streak today, thanks to the greenback's sharp pullback against most of its foreign rivals. What's more, the malleable metal powered into the black despite concerns that India's gold imports could fall to a 12-year low in 2009. Shilpa Kumar of ICICI Bank told Reuters that the country's gold demand in the first half of the year was 55% lower than the same period in 2008, though the gap should narrow to 23% to 30% by year's end thanks to pay increases and India's rural employment scheme. Against this backdrop, September-dated gold gained $10.50, or 1%, to end at $1,014.20 an ounce.
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