The market sold off into the close taking all major equity indices into the red, along with bond yields and crude oil. Once again, market breadth was worrisome as more publicly-traded companies languished in their own individual bear market.

Market Breadth	NYSE	NASDAQ
Advancers	1,091	1,116
Decliners	1,858	1,898
New 52- week highs	60	80
New 52- week lows	111	80
Advancing volume	935.1 million	948.8 million
Declining volume	2.4 billion	1.3 billion

Fed Rate Hike

The Federal Reserve wrapped up its Federal Open Market Committee (FOMC) gathering with the following three headlines:

• Economy growing faster than previously modeled
• Inflation (unchanged) is tamed
• Removing accommodation

This is the third time in 2018 that the Fed has raised its growth outlook for the economy. The Fed is looking at more rate hikes to take the Fed fund rates to 3.5%

• 3 hikes in 2019
• 1 hike in 2020

Fed Flares?

Federal Reserve Chairman Powell was asked about tariffs a couple of times. He offered that when all announced tariffs have been added up in the aggregate, they are “relatively small” and “hard to see much” impact thus far.

One questioner mentioned Walmart (WMT), Gap Inc. (GPS), General Motors, (GM) and Macy’s (M) issuing warnings, to which Powell hinted they already had trouble passing on cost, in part to the Amazon Effect. 

Shares of these companies are all down, including Procter & Gamble (PG) and Harley-Davidson (HOG); only Macy’s (M) is higher. After the close, Bed Bath & Beyond (BBBY) was getting hammered for the same reasons.

When pressed, Powell acknowledged “protectionism” would be bad for the American economy, and said for the moment, businesses are expressing a “rising chorus” of concerns about the potential effect on supply chains, material costs, and lost markets.

I think Fed action spoke louder than the Q&A segment of the FOMC.

The Fed hiked its Growth Domestic Product (GDP) outlook again but kept inflation levels the same – which suggest this is a Goldilocks Economy, although some might interpret this as "it can’t get any better than this."

Federal Reserve Summary of Economic Projections	2018	2019
GDP	3.1%	2.5%
June	2.8%	2.4%
Unemployment Rate	3.7%	3.5%
June	3.6%	3.5%
Core PCE	2.0%	2.1%
June	2.0%	2.1%
Fed Funds rate	2.4%	3.1%
June	2.4%	3.1%

Today will be a critical session. I think we could be higher after consolidating new all-time highs.

Financial Follies

The most interesting action in the market came in the decline of the Financial (XLF) sector. Bank of America (BAC) and Goldman Sachs (GS) was the worst performing sector of the session. Most of the ground gained over the past three months was almost wiped out this week. Is it about flat yields or flat business models?

Back to the Winners

Interestingly, there were a number of winning sectors in the session. Communication Services (XLC) sector, led by Netflix (NFLX), Disney (DIS), and Facebook (FB) continue its strong debut week. Health Care (XLV) continues to be the new safe haven for investors as higher rates pressure Real Estate (XLRE) and Utilities (XLU).

S&P 500 Index	-0.31%
Communication Services (XLC)	+0.44%
Consumer Discretionary (XLY)	+0.21%
Financials (XLF)	-1.22%
Health Care (XLV)	+0.14%
Real Estate (XLRE)	-1.14%
Technology (XLK)	-0.38%
Utilities (XLU)	-0.90%

 

Comments

4.2 %G.D.P. GOTTA LOVE that. But watch somehow, someway, B.O. & HRC. DEMS. WILL CLAIM ITS THEIR RESIST &NOT SIGNED REG&TAX CUTS, THAT HAVE BROUGHT THIS NUMBER OUT. Funny how economists gir news dems called it sugar high or NOT EVEN MEN THY ION ECONOMY..BIT NOW WANT TO CV L ASIM ITS ALL THEIR PROGRAMS..LOL THANK YOU CHARLES PAYNE & FBN, FOR BEING THE FACTS BASED NEWS. THANK YOU PRESIDENT TRUMP FOR STARTING THIS ECONOMIC DEVELOPMENT & FOR YEARS TO DECADES OF IT HELPING ALL OF USA CITIZENS, NOT BY RACE, OR MONEY STATUE OR POWER, BUT ALL USA VETERANS & FAMILIES & CITIZENS AS WE ALL BENEFIT FROM UNITY, NOT TRIBALISM AND SEPARATION BY RESISTANCE &VIOLENCE BASED ON FEAR &EMOTION, NOT FACTS AND REMOVAL OF HISTORY ( CENSORSHIP IS DEMS SOCIALIST & COMMUNIST PROPAGANDA &WE THE USA CITIZENS AGAINST IT.!) J on 9/27/2018 10:37:11 AM

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