Fed Meeting Tanks Bond Yields, Dow Up 230

Markets were up today in heavier than usual trading as investors saw good opportunities in what has been a falling marketplace. The Dow gained 227.11 points to close at 18,076.19, breaking 18k again after falling below the mark early last week. The S&P 500 was up 25.22 points to 2,099.50. The NASDAQ gained 45.39 points to close at 4,982.83. Overseas markets were mostly up, with Japan and London both gaining more than 100 points and Hong Kong's Hang Seng up 218.59. Germany's DAX fell -57.80 to close at 11,922.77.

Oracle, Apple, Pandora Upgraded To Buy.  Analysts at UBS took an opportunity to upgrade some major tech players to Buy status today.
Database and cloud computing software giant Oracle (ORCL) rose by 1.26 points to $44.13 per share. Internet radio provider Pandora Media Inc (P) rose by 4.20% to $16.39.  Device manufacturer Apple (AAPL) gained 1.43 points to close at $128.47 per share. All three companies were upgraded to Buy from Hold on the strength of their earnings and recent sales reports.

Adobe Down Despite Gains In Sales And Profits.  Software company Adobe (ADBE), which manufactures popular photography and film editing suites Photoshop and After Effects, saw share prices fall today despite exceeding the previous quarter's earnings targets. The company adjusted Q2 guidance downward, which sparked a selloff. Adobe lost -2.77 points today, and closed at $76.89 per share.

Increased Hiring Drives Growth In Personnel Services.  Falling unemployment rates have been good to job placement companies Manpower (MAN) and Barrett Business Services (BBSI). Barrett, which places mostly white collar workers and office support personnel, rose 1.08 points and closed at $43.51 per share. Manpower, which focuses more on blue collar workers, rose by 1.71 points to $86.26.

Bonds Dive After Fed Meeting Wraps Up.  The Fed wrapped up a two day meeting this afternoon, which ended without a raise in interest rates. A spokesman also said that rates were likely to stay flat through their next meeting in April. The Fed has taken a doveish position on rate hikes, and explicitly said that interest rates would not rise until the economy was on firmer footing with regards to inflation and consumer spending.

Treasury bills typically fall whenever there are concerns over rate hikes. Today, the yield on 10-year bills were down 0.11% at the end of the day. Since government bond yields are a key indication of the relative strength of the dollar compared to foreign currencies, when yields fall the currency in commodity markets behave in predictable ways. Some economists refer to this pattern as a weak dollar reaction. Short-term FOREX traders and commodity option buyers often make money by forecasting these trends, then tailoring their investments to profit from them.

Weak Dollar Reaction In Currency And Commodities.  Falling bond yields prompted a spike in the value of export commodities and gold today. Most foreign currencies also made gains on the US Dollar, rising slightly after a hard month of losses caused by the relatively faster growth of the US consumer economy. Crude oil gained $1.20 per barrel, and gold was up $3.10 to finish at 1,151.30 per troy ounce. Export commodities like wheat, corn, soy, and beef were all up. Import commodities like cocoa and coffee fell. This is a typical reaction that can be seen in the currency and commodities markets when bond yields fall, inflation rises, or in any other circumstances where the US Dollar weakens.
Published on Mar 18, 2015
By Aaron Phillips
Aaron Phillips is a financial researcher and journalist based out of Michigan. He regularly writes the IG Daily and IG Weekly columns.

Copyrighted 2020. Content published with author's permission.

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