Tag - WINN

Small-cap stocks generated a solid rally through several minor economic reports this morning and then sustained the upside push through a volatile, but ultimately upbeat reaction to the Federal Open Market Committee announcement, which either stalled or ended a rate cut cycle that began back in September 2007. For the day, the Russell 2000 (NYSE:IWM) rallied 8.38, or 1.18%, to 716.30.

The rally in small caps basically recovered about two-thirds of the big slide from Tuesday, but failed to suggest that the market’s breakdown into a new lower range was premature. It will take a decisive push back above 720.50 to validate any kind of bottoming action from today’s rally, or else it will simply look like a dead-cat bounce amid oversold conditions.

The much-awaited FOMC news fulfilled market expectations, and the rally in stocks in the face of no rate cut to serve up cheap money in difficult times was a decent showing.

As for the announcement itself, “The bottom line is that the Committee is now in a wait-and-see mode to see how the economy and inflation unfold during the second half of the year,” Steven Wood, chief economist with Insight Economics, said in an email.

Wood noted that an improvement in economic conditions should spur tighter monetary policy but that a weaker economy might not prompt further rate cuts unless inflation abates. “We believe that the tax rebate effect on consumer spending will quickly fade as the summer progresses and energy prices stabilize or retreat slightly. This . . .

Small-cap stocks are rallying in Wednesday midday trading, as oil futures declined sharply after the Energy Department said oil and fuel supplies are larger than expected. Investors are waiting for news from the Federal Reserve’s rate committee, which wraps up a two-day meeting this afternoon. The Fed is widely expected to end the rate cut cycle and talk tough on inflation. At 2:01 p.m. ET, the Russell 2000 (NYSE:IWM) was up 7.88, or 1.11%, at 715.80.

Crude oil prices are sharply lower in afternoon trading. The Energy Department said in its weekly inventory report that crude oil supplies rose, while Wall Street expected a 1.7 million barrel decline. The supply increase gave investors reason to believe that skyrocketing gas prices have lowered demand. Crude is down 3% to $132.73 a barrel in recent trading.

The new home sales report clocked in at minus 2.5% and the inventory of new homes was at 10.9 months, which was a mild rise over the previous report. Although the home sales data was weak, it didn’t deter the stock market, which is already focused on the Fed later today.

“Set the snooze button for 2:15 ET PM today for the FOMC decision and we'll all be tearing apart the text for nuances on what to expect going forward. Market has 50 basis points of tightening priced in for Fed Funds by the end of December,” Andy Busch, global foreign exchange strategist for BMO Capital Markets, said in an email. “The U.S. Treasury's auction of two-year notes Tuesday showed a big surge in demand with the bid to cover ratio at 2.64, up from 2.28 last and an indirect foreign bids of 27.7% that show Treasury market participants believe the Fed tightening . . .

Small-cap stocks opened higher Wednesday, providing a welcome respite to the bulls who endured a slide to two-month lows in the Russell 2000 the previous session. The market was underpinned by short-covering amid oversold conditions ahead of this afternoon’s FOMC meeting announcement and by a bounce in financial stocks. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was up 4.67, or 0.66%, at 712.59.

The new home sales report came in at minus 2.5% and the inventory of new homes was at 10.9 months, which was a mild rise over the previous report. Although the home sales data was weak, it didn’t deter the stock market, which is already focused on the FOMC later today.

Earlier this morning, orders for May durable goods came in unchanged, which was slightly softer than the forecast for a rise of 0.1%. Although durables missed the median forecast, it was close enough to have very little impact on stock market trading.

Also on the data front, the MBA mortgage application survey came in at minus 9.3%, which was the lowest level since July 2001. In addition, the report showed that the purchasing index fell 7.4% to the lowest point since February 2003. Also, the refinance index tumbled 12.1% to the lowest level since July 2001. With the housing market still soft and rates firming, mortgage activity has slowed to a crawl.

Crude oil prices were lower this morning, which allowed some breathing room for this morning’s bounce in U.S. equities. However, stocks remain extremely sensitive to intraday gyrations in energy prices, and any rise in black gold during the session could endanger the early bounce in stocks. The weekly inventory report is slated . . .