Market Reacts Negatively to FOMC Comments

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The market took comments regarding QE in a negative light and sold off sharply after hitting cycle highs yesterday. The S&P 500 traded off by 1.25% and the Dow was lower by 0.77%. Six of the ten S&P sectors sold off by more than 1% today. Energy and materials were the weakest sectors on the day.

There were several comments made regarding the continued purchases of securities by the Federal Reserve. Some of the discussion between Fed members considered stopping the buying sooner than expected but holding the securities for a longer period. The Fed really has not changed their stance for quite some time. They will aggressively buy securities as long as employment is a concern and until growth picks up.

Gold, copper, and crude all traded lower by more than 2% today. Changing perceptions about global monetary policy and the impacts of those changes on inflation put metals under heavy pressure all day.

Industrials traded down in line with the broader market today. Capital equipment names traded ahead of the tape. Joy Global actually traded higher by better than 2.5% after their Chairman made positive comments about demand trends from China. He feels demand from China bottomed, citing a steady improvement in demand for heavy equipment. Caterpillar was off after they disclosed that January retail sales slowed.

Energy gave back yesterday’s gains as crude fell by over 2%. Natural gas finished flat on the day. The selloff in crude led to weakness in all industry groups within the sector.

Source: PFS Group

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