Are Bulls Banking on Bernanke to Spook the Bears?
US Markets finish flat to negative despite looming storm clouds on the horizon.
US markets finished on the negative side of flat today despite several storm clouds looming on the horizon. The SPDR S&P 500 ETF (NYSEARCA:SPY) lost .25%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) lost .42%, the PowerShares QQQ Trust Series 1 ETF (NASDAQ:QQQ) lost .38%, and the iShares Russell 2000 Index ETF (NYSEARCA:IWM) lost .48%.
Today’s “quiet before the storm” was filled with mixed economic reports, as the negative Retail Sales report released today cast a dark cloud over the positive Business Inventories report and Empire State Manufacturing Report. Retail Sales for the month of June decreased .05% from May, while the Business Inventories report indicated a .03% increase in inventories and the Empire State Manufacturing report indicated a reading of 7.4 in July compared to 2.4 in June. So, all in all, a mixed bag of reports today, which comes as no surprise as our economic recovery continues its anemic tendencies.
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On any normal day which consists of a European financial crisis, summer slowdown, and a Libor scandal, markets would typically be crashing and burning by now. However, what is likely keeping markets afloat (surprise! surprise!) are hopes that Dr. Bernanke will save us again beginning tomorrow with his two day testimony to Congress. Analysts predict Dr. Ben will be on the dovish side of things this week, which suggests that the Fed might have more easing and accommodation in mind. Investors are surely looking to the Dr. and his team of Fedsters to pump more liquidity and life into the markets, however, with an unresolved Europe mess, record trading lows, fiscal cliff, election year, summer slowdowns, and a libor scandal, how much can the Fed really do? We will wait and see I suppose…
Bottom Line: Markets finished flat to negative today as investors wait (a.k.a hope and pray) that Dr. Ben will ride in and save the day again. With the multiple and ominous storm clouds brewing however, one wonders how much the Fed can really do once a few of these thunderstorms (say firestorms?) begins.
John Nyaradi is the author of The ETF Investing Premium Newsletter.