U.S. Equities Shrug Off Greek Elections And Trade In Thin Range Ahead Of June 2012 FOMC Meeting:
Stocks traded in a narrow range of roughly 90+- points for the Dow Jones Industrial Average as investors waited for the Fed to signal whether more easing would occur. The June 2012 FOMC meeting starts tomorrow and investors seemed to stay away from large long or short positions in trading today.
Market participants in the U.S. shrugged off the Greek elections as overhyped although the Greek stock market and other major European indexes were up today. The euro declined 1 percent and we expected some movement would occur after the worse case scenario in Greece did not materialize.
We did see several positive signs today as the sectors we have been watching stabilized. The financials barely moved up in the trading session today but small caps rose and the NASDAQ soared today. The NASDAQ rose 22.53 points up 0.78 percent to 2895.33 which suggests the overall market is poised to rally if the Fed signals more easing is probable. Economic data in the U.S. has deteriorated in the second quarter of 2012 and we lowered our economic outlook in mid May. Thursday’s jobless claims numbers are likely to confirm June 2012 will be another soft month for employment growth. We believe the market would fall precipitously if no mention of easing occurs as some central banks have already moved to add liquidity such as China and Australia. We believe the chances the Fed will ease or extend “Operation Twist” are slightly above 55 percent.