Both the bulls and bears can make a good case for who won the battle Wednesday.
The market was weak most of the day until the Fed interest rate decision hit at 2 p.m. ET. It was well anticipated the Fed would have a dovish tone but Fed Chair Jerome Powell and his cohorts were even more dovish than what the market was hoping for.
Essentially the chances of a rate hike this year are now zero and there are no concerns about inflation or the Fed balance sheet.
Although this is extremely market friendly there is no end to the market participants complaining about how outrageous the Fed's easy money policy has been for so long. Disaster awaits us according to many pundits, but these are basically the same arguments we have been hearing for many years.
The indices flew higher on the Fed decision but reversed sharply and gave back the bulk of the gains by the market close. Small-caps and financials were particularly weak while the FAANG names, gold and oil led to the upside.
The bearish spin is that the inability to run hotter on such dovish news is a negative. The bullish spin is that it is a mistake to fight the Fed when they are this dovish. Cheap capital will keep the market running.
The price action will determine the winner and the late selloff does raise some concerns. However, the indices have been doing so well for so long they are entitled to some rest. Technical conditions are still good but there are a few signs of issues that could become a problem.
There is still some interesting stock-picking and that is what keeps me positive right now. Maybe the Fed is doing the wrong thing, as many pundits, proclaim, but you don't argue with the guy that prints money.
Have a good evening. I'll see you Thursday.
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