MARKET SNAP: At 6:26 a.m. ET, S&P 500 futures up 0.16%. Treasurys higher at 2.75%. Nymex up 0.68% at $100.63; gold down 0.22% at $1285.9/oz. In Europe, FTSE 100 up 0.19%, DAX up 0.83% and CAC 40 up 0.42%. In Asia, Nikkei 225 up 0.56% and Hang Seng up 1.47%.
WATCH FOR: EST. Mortgage Bankers Association weekly mortgage applications survey. [Last week composite index +0.4% on-week, purchase index -3.8% , refinance index +2.9%.]; 8:45 a.m. EST. Federal Reserve Bank of St. Louis President James Bullard participates in New York panel discussion
THE BREAKFAST BRIEFING
The market loves Janet Yellen.
The Fed chairwoman delivered her first Congressional testimony on Tuesday. The most important word was “continuity,” as in, Ms. Yellen isn’t going to jerk Fed policy around just because she’s moved over one seat (she was previously the vice chair). While she didn’t appear to us to be particularly dovish—she did, after all, maintain that the tapering would continue at its current pace—the market lapped up what she had to say.
“Markets got what they wanted from Yellen saying we’ll get more of the same from the Fed,” said Chris Gaffney, senior market strategist with EverBank Wealth Management.
The Dow jumped nearly 200 points, and the Nasdaq Composite average poked into the green for the year. The S&P 500 is now off just 1.6% on the year. The Dow is off a bit more, at 3.5%. Still, with a new surge of momentum, and with a Fed it imagines is in its corner, the selloff that marked most of 2014 seems like it’s already over.
Indeed bulls have been fighting back in measured but dogged style since Feb. 3, even if they have not yet managed to quite recapture January’s high ground.
Since Ms. Yellen spoke, global trading screens have been glowing apple green, although, in Asia’s case, some unexpectedly strong trade data out of China, and its soothing effect on the emerging market mood generally, is in the mix of positives, too.
It’s looking good for the bulls right now, but whether this is a bounce or a lasting turnaround is not an answered question. “Stocks have made a minor bounce thus far,” Mark Newton, chief technical analyst at Greywolf Execution Partners wrote, “but tough to still make too much of this as being all that powerful until we see these gauges move higher and see S&P, DJIA recapture areas of importance.”
Those levels are 1815 (S&P 500), 16200 (DJIA), and 1142 (Russell 2000). The S&P punched through that Tuesday afternoon. The other two are still below there.
So even though the market’s acting like it’s got a new patron at the Fed, it’s too soon to say the January selloff is definitively over.
Morning MoneyBeat Daily Factoid: On this day in 1912, Hsian-T’ung, the Emperor of China, abdicated his throne, at the tender age of six, and after a four-year rule (yes, he took the crown at two). It was not a decision that a six-year old would naturally make, and indeed the young emperor did not make the decision on his own. He was forced to abdicate following Sun Yat-sen’s republican revolution, ending 267 years of Manchu rule and 2,000 years of imperial rule. This set him on a decades-long odyssey that involved exile and imprisonment, and a stint as a puppet of Japanese imperial ambitions. In 1959, he was pardoned by Mao Zedong, and later worked in a mechanical repair shop in Peking.
-Paul Vigna
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