The Federal Reserve Delivers

December 17, 2020 09:58 AM
The S&P, Nasdaq, and Dow have all set fresh record highs today
Added tailwinds are coming from lawmakers closing in on a $900 billion bipartisan fiscal package
Weekly Jobless Claims increased for the second week in a row
Stock Market Update for Traders

Stock Market Update for Traders

Wednesday's Close

E-mini S&P 500 (March): Settled at 3693.75, up 6.75

E-mini Nasdaq-100 (March): Settled at 12,670.75, up 74.75

The Federal Reserve delivered yesterday. Although they didn’t announce some new robust stimulus program, their absolute and total commitment to highly-accommodative monetary policy until the economy recovers fully was exactly the reassurance risk assets needed. Or, for USD to complete its swan dive. The S&P, Nasdaq, and Dow have all set fresh record highs today and the Russell 2000 already did the same this week. 

In times like this, we must ask ourselves this: with USD broadly -7% on the year and at the weakest levels since Q2 2018, are assets getting more expensive, or is the currency used to value such assets simply eroding? This is a discussion for another time, but it does put into perspective the road we’re traveling.

Added tailwinds are also certainly coming from lawmakers closing in on a $900 billion bipartisan fiscal package, just as Friday’s budget deadline looms. Traders must keep an ear to the ground on these developments. Given today’s landscape and the Fed’s green light in the rear-view mirror, this narrative is the tallest hurdle. Other hurdles include antitrust lawsuits gaining steam against Big Tech and Brexit talks.

Jobs data this morning was mixed. Weekly Jobless Claims increased for the second week in a row and missed expectations for the past 4 out of 5 weeks. However, Continuing Claims hit a new pandemic low of 5.508 million, beating expectations for 4 weeks out of the last 6. Still, Philly Fed Manufacturing fell to 11.1 from 26.3, well below expectations at 20.0. This comes on the heels of NY Empire State Manufacturing on Tuesday.

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