The market is wrapping up the week on a sedate note. After some excitement Thursday on uber-dovish comments from the Fed and a much better than expected report from Microsoft (MSFT) things have calmed down.
Microsoft is holding on to a good gain, but the initial strength was sold and the stock is looking to find some support. There were a slew of price target increases but investors have been anticipating good news so it is priced into the stock to some degree.
More importantly, the Fed has felt it necessary to "clarify" comments made by New York Fed President John Williams Thursday. The market jumped on the possibility of a half-point cut but the Fed indicated that an "insurance cut" of a quarter-point was most likely.
If the expectations of a half-point cut had been allowed to build it would have created some problems for the Fed at the upcoming meeting. Fed futures have given back all of the gains on the Williams comments and now indicate a high likelihood of a quarter-point cut.
The Fed has a "blackout" rule that will shut down any further comments about policy from Fed members starting Saturday. There will be no additional speeches or comments until after the next meeting.
The indices are holding on to early gains but have been trending down. Breadth is running slightly positive with 3,700 gainers to 3,250 losers but the number of new 12-month highs have picked up again with over 250.
Indications that a half-point cut is unlikely have weakened the dollar and that is putting pressure on precious metals, which had a furious run lately. The stocks in the group need some consolidation and are doing that to some degree today. Bonds are also taking a rest.
Other than some reaction to the Fed the market has been quite dull lately with low volume, slow action and not many pockets of sustained momentum. Earnings season picks up steam next week and should give us some better trading in individual stocks to make it more entertaining. I'm doing little.