face teeth scream

[credit provider=”Pink Sherbet Photography, Flickr” url=”[email protected]/3561050613/”]

Kind of an unbelievable day in the market today.But first, the scoreboard:

Dow: +429.62
NASDAQ: 124.84
S&P 500: +53.10

And now, the top stories:

  • Obviously, yesterday’s crash and burn stock market cast a shadow across global markets. Asia tanked right off the bat. Europe got creamed in the early going, with the DAX down by over 5% at one point. Ominously, credit default swaps in Germany are rising, a sure sign that the credit risk is beginning to infect the core.
  • US futures, through it all, were mostly quiet in the early going, even as Europe burned. Obviously, all eyes were on the afternoon Fed statement (would it go QE3?!).
  • By the time markets got going, there was a full-blown rally in effect. Notably, Bank of America jumped 7% right out of the gate, a welcome turnaround from yesterday’s sickening 20% plunge. Other financial rallied as well.
  • An interesting thing happened in the opening minutes of the day. Everyone got the same idea at the same time: Sell the rally. After being up over 100, the Dow went flat. But then, because everyone must have thought this was a totally obvious move, stocks spiked again.
  • And then after that things were mostly quiet pre-Fed, although the Swiss Franc kept surging all day (against the dollar and the euro), a hint, perhaps, that the market was looking for an “easy” statement from the Fed.
  • Bizarrely, the Fed was actually late with its 2:15 announcement. It came around 2:19, as Bernanke performed an Obama. Then the announcement: No new QE was announced, but the Fed promised to stay on hold until mid-2013, an unprecedented level of commitment to cheap money. It did acknowledge the downside risks, and interestingly there were three dissenters, a sign that this practice of leaving money cheap from now until infinity is not uncontroversial.
  • The market reaction to that was fascinating. First the entire rally vanished. Then markets rallied back. Then there was a big-time plunge, with the Dow off nearly 180 at one point. Then it came back. And then in the final moments of the day, stocks turned in the face-ripping mega-surge traders have been thirsting for for sometime.
  • Besides the stock rally, Treasuries went bonkers as well, with the 10-year yield hitting an all-time low of 2.03% before pulling back a bit. Meanwhile, the Swiss Franc is nearing parity with the Euro, and gold is on fire.
  • And now for some deep reading, see this take on the economic impact of the S&P downgrade >