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Market Snapshot: FOMC Minutes Spook Market

  • Written by Syndicated Publisher No Comments Comments
    February 21, 2013

    The S&P 500 started the day on a cautious note. Data on housing starts came in below expectations, although the Producer Price Index data continues to show tame inflation in the pre-consumer price chain. But caution is a common market mentality on days when the FOMC minutes are released. The market was down about 0.6% when the minutes were released at 2 PM, but when traders began deciphering the committee’ Views on Current Conditions and the Economic Outlook, a selloff ensued. Maybe the FOMC isn’t as committed to everlasting stimulus as the market wants. The index closed the day near its intraday low with a loss of 1.24%. That’s the biggest decline since November 14, near the end of the post-presidential election selloff.

    Here is a 5-minute chart of today’s action.

     

     

    Here is a daily chart since November 1st. Is today the start of a correction?

     

     

    The S&P 500 is now up 6.01% for 2013 and 1.24% below the interim closing high of February 19, 2013.

    From a longer-term perspective, the index is 123.5% above the March 2009 closing low and 3.4% below the nominal all-time high of October 2007.

     

     

     

     

    For a better sense of how these declines figure into a larger historical context, here’s a long-term view ofsecular bull and bear markets in the S&P Composite since 1871.

    Images: Flickr (licence attribution)

    About The Author

    My original dshort.com website was launched in February 2005 using a domain name based on my real name, Doug Short. I’m a formerly retired first wave boomer with a Ph.D. in English from Duke. Now my website has been acquired byAdvisor Perspectives, where I have been appointed the Vice President of Research.

    My first career was a faculty position at North Carolina State University, where I achieved the rank of Full Professor in 1983. During the early ’80s I got hooked on academic uses of microcomputers for research and instruction. In 1983, I co-directed the Sixth International Conference on Computers and the Humanities. An IBM executive who attended the conference made me a job offer I couldn’t refuse.

    Thus began my new career as a Higher Education Consultant for IBM — an ambassador for Information Technology to major universities around the country. After 12 years with Big Blue, I grew tired of the constant travel and left for a series of IT management positions in the Research Triangle area of North Carolina. I concluded my IT career managing the group responsible for email and research databases at GlaxoSmithKline until my retirement in 2006.

    Contrary to what many visitors assume based on my last name, I’m not a bearish short seller. It’s true that some of my content has been a bit pessimistic in recent years. But I believe this is a result of economic realities and not a personal bias. For the record, my efforts to educate others about bear markets date from November 2007, as this Motley Fool article attests.

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