Stocks Rangebound Ahead Of Key September 2012 FOMC Meeting:
Stocks recovered many of the losses from yesterday as traders await more news from Ben Bernanke and the Federal Reserve Bank regarding quantitative easing. Friday, the Bureau of Labor released data showing another month of lackluster non-farm payroll gains of 96,000 which is well below the annualized rate needed to keep up with population growth. The labor force participation rate hit a 30 year low the BLS said.
Most market participants believed last week some form of easing would be implemented at the September 2012 FOMC meeting being held this week with large brokerage houses putting out notes stating QE3 was on the way. In the last two trading days, stocks have stayed in a tight range although volatility picked up slightly.
The FXE exchange traded fund that tracks the euro spiked early in today’s session but U.S. stocks didn’t move in tandem with the key benchmark banking sector ETF the XLF rebounding from yesterday’s losses. We remain neutral in the short-run and have no real conviction before the all-important market moving meeting from the Fed. We believe a QE3 announcement is possible this week but Fed Chairman Ben Bernanke and his surrogates have not done any signaling this week. We are carefully watching bond yields from Spain, Germany, Greece and Italy as well as Apple as a general indicator of market sentiment.