The reinvigoration of the doves at the Fed is clearly a near-term phenomenon. Rates should proceed to rise slowly and ratably, over time, just like our central bank has been preparing for many months now.
More of the same out of the Fed. So what to do from here?
In the very near term, we see utility stocks spiking and financial stocks lagging. Next week, the reverse should occur as the algorithms readjust to the inevitably of slow and ratable rises in interest rates. I'd short some of the Utilities Select Sector SPDR ETF (XLU) and maybe buy some of the Financial Select Sector SPDR ETF (XLF) if I were a day or week trader.
Avoid consumer staples at all costs at the moment. There will be a better entry point for stocks like two of my favorites: Colgate-Palmolive (CL) and PepsiCo (PEP).
The utilities, right now, look like a dog's breakfast of desperation among the quantitative participants in our market in that never-ending search for yield (as fickle as it may be).
Favorite utility stocks like Aqua America (WTR) and Consolidated Edison (ED) are just not buyable here -- period. But if you are long a few of these utilities keep the core, reinvest the dividends and compound dividend growth over the long term. That is a prudent and wealth-creating game in time.
It just isn't a time to allocate meaningful new cash to work here. Look elsewhere, there is value out there.