Markets are making a push into record territory again this morning, after two better-than-expected economic prints came out ahead of the open. The market, however, remains largely range bound, as the S&P 500 has traded in record territory between 1,675 and 1,700 going on 14 days in a row now. As of 11:05AM, the S&P 500 is currently at 1,695 (+0.6%) while the DJIA is up nearly 100 points (+0.6%), just off a new all-time intraday high of 15,634.
The big event of the day is the FOMC announcement at 2PM – The positive ADP employment and GDP numbers continue to make the case that Fed “tapering” could begin as soon as September or December. In the closely watched Fx and bond markets, the dollar is climbing on this September/December taper speculation, while the 10-year yield is up sharply to 2.678% after climbing as high as 2.702% (2013 high is 2.754%). Today’s climb is 6.5 basis points higher from yesterday.
Items In Focus Today:
Positive GDP and Jobs Print – GDP for the second quarter came in better than expected at 1.7% – expectations were 1.1%, aided by stable consumer spending and a ramp-up in business investment. The growth rate in the first quarter, however, was revised down to 1.1% from 1.8%. ADP employment was 200K over the 183K expected. However, this week’s most important jobs print will come on Friday, when the BLS announces non-farm payrolls for July.
FOMC Announcement – Investors are waiting for guidance from the Fed on when it will begin reducing bond purchases and what form further stimulus will take. The central bank has indicated its $85 billion monthly bond buying could be trimmed should the economy meet its forecasts, though Chairman Bernanke has said there’s no fixed schedule for tapering stimulus.
Corporate Earnings – Comcast and MasterCard climbed more than 3.3% after posting earnings that topped analyst estimates. Facebook rose above its $38 IPO price for the first time since its debut trading day.