A stunning way for the rally to end!
But first, the scoreboard:
S&P 500: -2.6
And now, the top stories:
- The overnight action was very, very quiet as the whole world awaited today’s big FOMC decision. The first big event of the day was the successful Irish bond auction at 5:00 AM (ET). Strong demand — perhaps bolstered by the ECB — helped push down Irish spreads and send the euro surging. European national markets rallied as well.
- The news was quiet in the early going in the US. At 8:30 the housing starts number came in better than expected, which helped to establish a possible new line of thinking about housing: the super-ugly numbers we’ve seen the last few numbers may have been an overshoot reaction resulting from the end of the tax credit, and not necessarily reflective of the market as a whole. Still, the numbers remain very ugly.
- Following that it was basically all FOMC anticipation, and the market didn’t move too wildly.
- Then the FOMC hit at 2:15, confirming that the doors to further quantiative easing are wide open. Not only that, but the statement acknowledged the inflation “mandate”, new language which suggested that the Fed is open to pumping more aggressively in the future.
- Initially the market rallied, though the real violent action was in the forex-sphere. The dollar plunged against the yen, the euro, and gold. Gold hit a record high. The BoJ must already be thinking about when it’s going to intervene next.
- And then, although equities initially liked the move, the rally came to a halt. So not only did the dollar get hammered, but stocks didn’t even appreciate the incoming mega-pump.
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