FYI: Here’s a toast for the holiday season: To the Federal Reserve! The cause of, and solution to, all the market’s problems. The Fed stepped up and delivered a hike to short-term interest rates. Initially, U.S. stocks jumped at Wednesday’s announcement.
The hangover was severe on Thursday and Friday, however, as the SPDR S&P 500 exchange-traded fund (SPY) plunge 3.9% over the past two days. Why the reversal? Is it possible to have a dovish rate hike? How can the Fed’s rate hike be a catalyst for both buying and selling? These are the questions to mull while digesting the prospect of two to four interest-rate increases next year.
Part of the late-week trouble could be that speculative investors have already given up the quest to eek out incremental gains, which would bode ill for any type of “Santa Claus rallies.”
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/12/18/etf-market-vital-signs-what-a-long-strange-week-its-been/tab/print/
