Market Pops After Fed Announcement

On Wednesday, the market drifted down off the open in light-volume selling as investors waited for the FOMC decision on tapering and interest rates. 

The Fed's decision was to reduce the asset purchases (bond buying) by $10 billion; this lowers the monthly buying to $35 billion. The Fed will also keep the current interest rates in place and does not expect an increase in the near future.

After the Fed's announcement, the market got a lift and quickly erased the morning session's losses. The market went on to make a new daily high. The Nasdaq closed at 4,362, eclipsing the 4,346 swing high made on 9 June. The S&P closed at 1,956, one point above the 9 June high of 1,955.

It was the 4th consecutive up day for the market. The Nasdaq advanced +25 points (+0.59%), the S&P gained +14 points (+0.77%). The Dow Industrials rose +98 points, +0.58%). The Dow Utilities had a strong day, rising +1.99%. 

Range expanded today; the S&P range was 18 for the day compared to 10 on Tuesday. Volume was higher for all three major indices, making this an institutional buying day. Advancing stocks beat declining stocks by a 7-to-3 ratio, and up volume led down volume by a 9-to-2 ratio.

Volume was mixed, higher for the S&P but lower for the Nasdaq and Dow. This suggests that the sell off was not a broad decline and is more likely a normal pullback in an uptrend. Market breadth was negative all day, so the bulls took the day off. Decliners led advancers by 2-to-1, and down volume beat up volume by 7-to-4.