Wall Street Down On The Fed’s No Taper Decision

U.S. markets reacted negatively to a number of economic reports yesterday. The Federal Open Market Committee (FOMC) to delay tapering back its massive bond buying program to a weak ADP payroll report rattle investor confidence.

There was no surprise as the FOMC opted to make no changes to its $85 billon per month asset purchase program. In a statement released after the decision, they cited improvement in business investments but a slowing in the housing sector were the primary factors to delay.

Earlier in the day, we got the ADP employment report for October. Only 130K jobs were created in the private sector, which was way below the expected 150K number analysts had hoped for. This was the lowest reading of the ADP since April of this year.

STOCKS

The DJIA paired back a 100 point loss to close down 61.59 points at 15,618.76. We had seen an intraday high, near the open of the session, at 15,721. This shows the volatility of the day.

The S&P 500 ended its four session record high streak losing 8.64 points to close at 1,763.31. During the day, we saw much volatility. At one point we had an intraday high of 1,775.22. A new record, if it held. The Nasdaq Composite lost 21.72 points and closed at 3,930.62.

U.S. Treasure 10 year yields, used to help determine mortgage rates and other consumer loans, rose to 2.54 percent from 2.50 percent.

Asian markets followed the U.S. markets lower this morning as the Nikkei 225 moved a bit lower, 0.1 percent at the time of this report. The loss coming even as the USD/JPY is nearing a two week high. The Bank of Japan made no changes to its monetary stimulus program. This was not surprising and the markets are now waiting for their outlook to be released.

The Shanghai Composite was off 0.7 percent as investors were worried a bit by local corporate earnings reports. Also, the Yuan is now at a one week low against the U.S. Dollar. The Australian ASX 200 was up a nominal 0.8 percent as investors locked in some profits which capped gains.

CURRENCIES

The EUR/USD (1.3710) fell a bit but not as much as we thought after the FOMC decision. We did not get any clarity from the Fed as to the health of the U.S. economy and this dampened investor view a bit. We are still trading in a range from 1.3650 to 1.3840.

GBP/USD (1.6018) is trading steady and in a range from 1.6019 to 1.6250. We have good support at 1.600 which is holding. USD/JPY (98.359) strengthened as we are still above the support at 98.00. If we break above 98.70 then we can target 100.00 afresh.

COMMODITIES

Gold (1339.60) fell overnight and we could now range bound for a bit waiting on direction. We have support at 1300 and resistance at 1350.

Silver (22.435) is trading steady with resistance near its current level. If it break we can target 24.00. If not we could dip back to 21.00.

Copper (3.305) is still range bound and above 3.30. Any break above 3.37 can test 3.40. Below 3.30 can see a dip to 3.20.

TODAY’S OUTLOOK

Markets will be digesting the moves made by the FOMC and the Bank of Japan to stand pat on their asset purchase programs. We also will get a plethora of economic data out of the U.S. to keep us all quite busy.

The U.S. will release the Challenger job report, jobless claims, Chicago PMI, farm prices, Fed balance sheet and natural gas inventories.

Tomorrow, we get the much anticipated non-farm payroll (NFP) report.