The Fed decided to stay the course, continuing to buy $120 Billion in debt per month as the FOMC acknowledged rising inflation is more substantial than expected.  Though the initial reaction to the statement brought out the bears, the bulls charged back in a late afternoon rally.  The only index suffering some technical damage was the DIA which closed below its 50-day average.  Long story short, stay with the trend because the market no longer cares about debt or inflation.

Asian markets traded mixed overnight, with the Nikkei slipping nearly 1% while the HIS rallied.  European markets are pulling back modestly this morning across the board.  Ahead of earnings, Jobless claims, and manufacturing data, U.S. futures point to a modestly bearish open after rallying well off the overnight lows.  Stay focused and watch for whipsaw moves as the bulls and bears sort out dominance issues with overhead resistance levels as the battleground. 

Economic Calendar

Earnings Calendar

We have a slightly busier day on the Thursday earnings calendar, with eight companies reporting.  Notable reports include ADBE, JBL, KR, & SWBI. 

News & Technicals’

Eleven Republican senators now support a bipartisan infrastructure framework, which would give a bill enough votes to pass the Senate if all Democrats get on board.  However, several liberal senators have signaled they could oppose the bipartisan plan, saying it does not go far enough to fight climate change or income inequality.  China launched the first astronauts into space on Thursday as China challenges the U.S. in several technology areas.  The bill to make Juneteenth the 12th federal holiday sailed through Congress, passing the Senate by unanimous consent with the House passing the bill just one day later sending it on to the President to sign into law.  After spiking yesterday, U.S. Treasury yields drifted lower Thursday morning, with the 10-year coming in a 1.56% and the 30-year dipping to 2.179%.

The FOMC acknowledged rising inflation suggesting a rate increase is possible sometime in 2023 while at the same time continuing to buy debt at $120 billion per month.  The initial negative reaction whipsawed yesterday afternoon as buyers rushed back in after the press conference.  Though the SPY, QQQ, and IWM recovered substantially, the DIA suffered some technical damage closing below its 50-day average.  If the highest PPI on record is of no consequence to the market and the Fed continues to grow their more than 7 Trillion balance sheet, I guess the new normal is no financial metric matters anymore!  Stay focused on price action and stay with the trend as long as it lasts.

Trade Wisely,

Doug