The market was chugging along nicely until the minutes of the latest Fed meeting hit. If you want to spook this market, nothing is more effective than hinting that the Fed's quantitative easing program will end. QE has been a driving force for years, and it is frightening to think that there may not be an endless reservoir of liquidity.
Some Fed members indicated that it might be a good idea for the Fed's bond-buying to end at some point this year, and they are worried that the central bank can't spend $85 billion a month without negative repercussions down the road.
The market has been on a substantial run, so this was a convenient excuse for profit-taking. In the bigger scheme, the selling was extremely mild and it is probably healthy that the recent buying froth stays under control.
Friday morning brings the monthly jobs report, which will be the main market catalyst. What is interesting now is that good news may not be a market positive if the Fed really is serious about letting interest rates rise. It's still a long way to go to hit the Fed's unemployment target, but nothing is more important to the market than QE, and anything that affects how long that program runs will likely produce selling.
I'm not too worried about the market right now, but today's reversal was a slight negative and we'll have to watch the reaction to the jobs news very closely.
Have a good evening. I'll see you tomorrow.