Dovish Brainard Buoys Dow Jones Industrial Average

2 Biotechs Blasting Off and Burning Shorts

Sep 12, 2016 at 4:20 PM
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The Dow Jones Industrial Average (DJIA) stumbled out of the gate -- and even briefly dipped south of 18,000 -- but reversed sharply to finish on a triple-digit win, thanks to some dovish Fed chatter. In particular, stocks heated up in the afternoon after Fed Governor Lael Brainard warned against hiking interest rates too quickly, just hours after another Fed official called for a "serious discussion" about a September rate hike. "Today's new normal counsels prudence in the removal of policy accommodation," Brainard said, while adding that "the case to tighten policy preemptively is less compelling" due to lingering concerns about the labor market. Also fanning the bullish flames -- following the stock market's worst week since January -- was a jump in crude oil prices.

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

The Dow Jones Industrial Average (DJIA - 18,325.07) fell roughly 90 points at the open, but rebounded sharply to end on a 239.6-point, or 1.3%, gain. All but one of the 30 Dow stocks settled higher, with Wal-Mart Stores, Inc. (NYSE:WMT) and Procter & Gamble Co (NYSE:PG) leading the way, up 2.3% each. DuPont (NYSE:DD) was the lone laggard, off 0.4%.

The S&P 500 Index (SPX - 2,159.04) tacked on 31.2 points, or 1.5%. Also, the Nasdaq Composite (COMP - 5,211.89) popped 86 points, or 1.7%.

The CBOE Volatility Index (VIX - 15.16) plunged 2.3 points, or 13.4%, retracing about 50% of Friday's gains.

Indexes closing summary September 12
NYSE and NASDAQ stats September 12

5 Items on Our Radar Today:

  1. While Fed officials have been vacillating over if and when to raise interest rates, JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon didn't mince words during a speech today in Washington, D.C. "Let's just raise rates," he said. "The Fed has to maintain credibility. I think it's time to raise rates. Normality is a good thing, not a bad thing. The return to normal is a good thing." (Bloomberg Markets)
  2. Nemat Shafik, deputy governor for markets and banking at the Bank of England (BoE), announced she will resign next February to become director of the London School of Economics. While her term at the BoE was not due to end until July 2019, Shafik said "it was impossible to resist the opportunity to lead a world-class university." (The New York Times)
  3. The $305 million funding deal that set off a SolarCity Corp (NASDAQ:SCTY) rally.
  4. Alibaba Group Holding Ltd (NYSE:BABA) call buyers took aim at $100 following the firm's investment news.
  5. Why this biotech was the New York Stock Exchange's worst performer.

Unusual Options Activity September 12
Data courtesy of Trade-Alert

Commodities:

Oil prices took off due to a weaker dollar, a sharp bounce in U.S. stocks, and reports of a huge drawdown in crude barrels at the Cushing, Oklahoma, delivery hub. At day's end, October-dated crude futures were up 41 cents, or 0.9%, at $46.29 per barrel.

Gold settled slightly lower as traders digested the latest round of rate-hike chatter, and a broad-market rally weighed on the appeal of "save havens." At the close, gold for December delivery was down $8.90, or 0.7%, at $1,325.60 per ounce -- the malleable metal's fourth consecutive loss.

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