SPY Rose 1.6%, Investors Welcomed Hawkish FOMC Minutes
SPY Rose Due to the FOMC's Comment, Mining Sector Propelled EWU
SPY rose 1.6%
The SPDR S&P 500 ETF (SPY) and the Direxion Daily S&P500 Bull 3X ETF (SPXL) rose 1.6% and 4.8%, respectively, on Wednesday, November 18. The day was upbeat for US investors. Many corporate deals were important to the stocks’ rally. In the afternoon session, the minutes of the FOMC (Federal Open Market Committee) meeting were released. The minutes highlighted the fact that the FOMC members were optimistic about prerequisite conditions for a rate hike. The conditions could be met in December.
The strong employment report for October 2015 supported this viewpoint. The hawkish comment about the liftoff strengthened investors’ confidence regarding the US economy. Despite the fact that ultra-low interest rates boost the stock markets, investors welcomed the comment about the possible rate hike in December. The above graph shows a snapshot of the market on the day.
Market snapshot
The US dollar is represented by the PowerShares DB US Dollar Bullish ETF (UUP). Oil is represented by the United States Oil Fund (USO) and gold is represented by the SPDR Gold Trust (GLD). The Treasuries bond market is represented by the iShares Trust – iShares 20+ Year Treasury Bond ETF (TLT). Volatility is represented by the Index, Volatility S&P 500 (^VIX).
The US dollar rose in early trading but settled with no change at the end. Oil rose by 0.31% because the US crude rose to $40.75 per barrel. According to the EIA’s (Energy Information Administration) report on the petroleum status, the crude oil inventory for the week ending November 13, 2015, only rose by 0.3 MMbbls (million barrels). This is the lowest reading in six weeks. This reading reflected a weekly decrease in both the imports and domestic oil production combined with the rise in the demand from the oil refineries.
Therefore, the energy stocks rose on November 18 due to the rise in the oil price and lower-than-expected buildup in the oil inventory. The stocks of CONSOL Energy (CNX), Noble (NE), Baker Hughes (BHI), and Nabors Industries (NBR) rose 7.7%, 5.9%, 4.5%, and 4.1%, respectively, on the day.
Gold rose on the day. The prices for the Treasury notes, or T-notes, rose ahead of Fed’s possible liftoff. The volatility index fell sharply as investors’ appetite for the risk assets rose even after the hawkish comment from the FOMC members.
Next, we’ll look at the corporate events as well as the sector performances of SPY as of November 18.
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