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Latest Updates <http://www.briefing.com/Partners/Yahoo!/> _____ 4:20 pm : A big decision by the Federal Open Market Committee fueled a big day for the stock market. The major indices were already trading with modest gains ahead of the 2:15 ET decision from the FOMC. Those gains were built on the back of a better-than-feared earnings report from investment bank Lehman Bros. (LEH 64.49, +5.87), stronger than expected results from retailer Best Buy (BBY 47.46, +2.92) and a reassuring PPI report for the month of August. The action prior to the FOMC decision, though, paled in comparison to what came after the FOMC's decision to cut both the fed funds rate and the discount rate by 50 basis points to 4.75% and 5.25%, respectively. Conventional wisdom was that the FOMC would cut the fed funds rate by just 25 basis points; and there was uncertainty as to what the FOMC would do with the discount rate. As it turned out, the FOMC took the aggressive road. In doing so, it created a great source of relief for the stock market that manifested itself in huge gains for the major indices. The Dow, Nasdaq and S&P all rallied better than 2.0%. The FOMC's rationale for the aggressive move was that it wanted to "forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time." Although the Committee judged that some inflation risks remain, the statement did not convey as much concern about the inflation outlook as past statements. The Treasury market for its part registered some inflation concerns as the back end of the Treasury curve underperformed the front end by a significant margin, resulting in some noteworthy curve steepening that will benefit the banking industry. The financial sector (+4.5%) was today's stalwart as it took off amid the confluence of good news that included the Lehman Bros. report, the rate cut action, and the curve steepening. It had plenty of company as every economic sector ended with a gain. The laggard of the bunch was the defensive-oriented consumer staples sector, which jumped "only" 1.75%. To be sure, there was a clear orientation toward growth in today's showing as the materials (+4.2%), consumer discretionary (+3.3%), industrials (+3.2%) and energy (+3.0%) sectors rounded out the list of the best-performing sectors. The commodity index also reflected the growth orientation. Copper prices rallied 2.6% while oil prices jumped to $82.10 per barrel in extended action. The rate cut decision weighed on the dollar, which stoked some inflation concerns and helped drive up gold prices 1.6%. The major indices ended at their highs for the session on a pickup in volume that followed the FOMC announcement.DJ30 +335.97 NASDAQ +70.00 SP500 +43.13 NASDAQ Dec/Adv/Vol 642/2355/2.12 bln NYSE Dec/Adv/Vol 346/3019/1.65 bln 3:30 pm : It has been a sprint higher since the FOMC decision at 14:15 ET. The indices are currently near their best levels of the day, underpinned by impressive leadership and robust buying activity. All 10 economic sectors are up better than 1.0% now and three - financial (+3.8%), materials (+3.6%) and consumer discretionary (+3.0%) - are up 3.0% or more. Strikingly, there has been a disparate response in the Treasury market where we have seem some yield curve steepening. The front end is rallying on the rate cut action while the back end is weak amid concerns the Fed's actions could stoke inflation. The yield curve steepening is a positive development for banks. Along with the better than feared results from Lehman Bros. (LEH 63.49, +4.87), it is contributing to one of the best days in some time for the financial sector.DJ30 +284.35 NASDAQ +58.01 SP500 +37.29 NASDAQ Dec/Adv/Vol 693/2261/1.57 bln NYSE Dec/Adv/Vol 418/2910/1.08 bln 3:05 pm : The indices are now taking a breather and pulling back a bit after the Fed's decision to cut both the discount rate and the fed funds rate by 50 basis points. Volume has clearly picked up now, as investors that were sitting on the sidelines before the Fed's decision are now active again. Noteable areas of weakness are hard to find, with stocks in the financial sector still leading the wayDJ30 +237.93 NASDAQ +50.13 SP500 +30.28 NASDAQ Dec/Adv/Vol 681 mln/2.25 bln/3.05 bln NYSE Dec/Adv/Vol 460 mln/2.82 bln/3.36 bln 2:30 pm : In what has come as a welcome move, the FOMC took the aggressive line of cutting both the fed funds rate and discount rate by 50 basis points to 4.75% and 5.25%, respectively. The decision stemmed from a belief that "the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally." The Fed directive did indicate that readings on core inflation have improved modestly but that the Committee judges that some inflation risks remain. The FOMC is going to contnue to assess the developments in the financial markets and will act as needed to foster price stability and sustainable economic growth. The vote was unanimous. As one might expect, sectors with close links to economic activity are leading the rally effort. The financial sector (+2.8%) is setting the pace and is followed by consumer discretionary (+2.0%), materials (+2.0%) and industrials (+1.8%). DJ30 +197.43 NASDAQ +42.11 SP500 +26.10 NASDAQ Dec/Adv/Vol 1087/1785/1.03 bln NYSE Dec/Adv/Vol 960/2308/692 mln 2:20 pm : The FOMC announced that it has cut the fed funds rate by 50 basis points to 4.75%. In addition, it also announced a cut in the discount rate by 50 basis points to 5.25%, noting that today's action is intended to "forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time." The initial reaction in a fast stock market has been decidedly positive.DJ30 +216.15 NASDAQ +36.52 SP500 +28.48 2:00 pm : With the Fed announcement now only about 15 min away, the indices have made a slight move higher, but investors mainly continue in their holding pattern in anticipation of the Fed's decision. After the announcement, the indices could see a number of knee-jerk reactions before settling on a direction as investors digest the decision and any commentary from Mr. Bernanke. Gains in the indices continue to be broad based across sectors and market caps, while bonds continue to tick lower ahead of the Fed. DJ30 +79.83 NASDAQ +11.22 SP500 +10.23 NASDAQ Dec/Adv/Vol 1.13 bln/1.70 bln/2.98 bln NYSE Dec/Adv/Vol 921 mln/2.32 bln/3.33 bln 1:30 pm : The indices have cooled off a little ahead of the FOMC rate decision, expected at 2:15 ET this afternoon, while volume begins to pick up a bit. Until the Fed release, the markets should continue to be mostly muted. Expectations, including <http://Briefing.com> Briefing.com, are for a 25 basis point cut. Oil continues its march higher today, currently at 81.50, in anticipation of a Fed cut and a report of a pipeline blast in Iraq. Financials, and in particular brokerages, continue their strength after Lehman topped analyst expectations this morningDJ30 +83.24 NASDAQ +11.77 SP500 +10.07 NASDAQ Dec/Adv/Vol 1.1/1.7/2.9 bln NYSE Dec/Adv/Vol 893/2.33/3.3 bln 1:00 pm : There has been little change since the last update as the bulls have maintained their grasp on today's market. Leadership remains broad-based from a sector standpoint (all 10 sectors are trading higher) and from a market-capitalization standpoint. The S&P 500 (Large cap), 400 (Mid cap), & 600 (Small cap) Indexes are all up between 0.75% and 0.79%. DJ30 +89.42 NASDAQ +14.65 SP500 +11.07 NASDAQ Dec/Adv/Vol 1083/1728/775 mln NYSE Dec/Adv/Vol 916/2279/504 mln 12:30 pm : The indices continue to hold the bulk of today's gains as sellers remain a silent bunch. Looking across the capital markets we see oil trading higher again today. Crude futures for October delivery are now up $0.97 at $81.55 per barrel. The jump in energy prices is being attributed to an expectation that the government's inventory report tomorrow will show another drawdown in stockpiles and to optimism that the impending rate cut will help fuel economic growth and demand for oil. On a related note, today's PPI report showed a large 1.4% decline that was due primarily to a 6.6% decline in energy prices. With the recent boost in oil prices, next month's PPI report isn't likely to look as favorable.DJ30 +85.11 NASDAQ +13.13 SP500 +10.32 NASDAQ Dec/Adv/Vol 1063/1692/700 mln NYSE Dec/Adv/Vol 825/2351/451 mln 12:00 pm : The stock market is trading with a bullish bias ahead of the FOMC decision at 14:15 ET. The move has some merit, but at the same time, it hasn't occurred on very heavy volume, which suggests conviction isn't as strong as the numbers imply at mid-day. The latter point aside, today's participants have been heartened by a number of developments that have fed the positive disposition. Specifically, investment bank Lehman Bros. (LEH 60.46, +1.84) had a better-than-feared fiscal third quarter earnings report, topping the consensus estimate of $1.47 by seven cents and noting that its liquidity position is now stronger than ever. The Lehman Bros. news has given the financial sector (+1.2%) a nice boost that has left it as today's best-performing sector. Consumer discretionary (+1.0%) and materials (+1.0%) have followed in its footsteps as the outlook for a Fed rate cut, a reassuring PPI report this morning, and stronger than expected earnings results from Best Buy (BBY 46.56, +2.02) have sparked buying interest in growth-oriented sectors. Sellers haven't exerted any real pressure to this point, but a sense of reserve on the part of today's participants is evident in the low volume totals for the NYSE (389 mln) and Nasdaq (618 mln). The trading excitement, and volume, seem certain to pick up following the FOMC decision. <http://Briefing.com> Briefing.com expects a 25 basis point cut in the fed funds rate. The market will be reacting to the size of the rate cut and the wording of the accompanying policy directive.DJ30 +89.83 NASDAQ +15.66 SP500 +11.36 NASDAQ Dec/Adv/Vol 1056/1683/618 mln NYSE Dec/Adv/Vol 849/2315/389 mln 11:30 am : Sellers haven't exerted any real pressure today, so the market has been able to put together a rally effort during the morning trade. The strength in the indices has been driven by broad-based participation with leadership provided by some of the market's key leadership groups, namely financial (+1.6%) and consumer discretionary (+1.1%). The outperformance of the areas above is a switch from recent sessions as favorable earnings news and the outlook for a Fed rate cut are driving some buyers back into the growth-oriented sectors. It should be noted, though, that volume remains on the low side, suggesting there isn't a great deal of buying conviction at this juncture. DJ30 +93.08 NASDAQ +15.75 SP500 +10.98 NASDAQ Dec/Adv/Vol 992/1713/515 mln NYSE Dec/Adv/Vol 850/2259/322 mln 11:00 am : The market is trading at its best levels of the day, as an optimistic tone has unfolded ahead of the FOMC decision at 14:15 ET. Briefing.com is expecting a 25 basis point cut in the fed funds rate. A lot can still happen between now and then, but for the time being, better than expected earnings news from the likes of Lehman Bros. (LEH 60.89, +2.27), Best Buy (BBY 46.34, +1.80) and Kroger (KR 29.00, +1.98), and a reassuring PPI report, have provided a spark. Additionally, it has been a relief of sorts for participants to hear Lehman Bros. indicate on its conference call that its liquidity position is now "stronger than ever." The equity market's strength is weighing a bit on the Treasury market where modest losses have been registered across the yield curve. The 10-year note is off 5 ticks bringing its yield up to 4.49%.DJ30 +88.85 NASDAQ +12.21 SP500 +10.11 NASDAQ Dec/Adv/Vol 1107/1508/384 mln NYSE Dec/Adv/Vol 914/2128/222 mln 10:30 am : The indices have perked up a bit in the last half hour on broad-based participation. The better than expected earnings reports from Lehman Bros. (LEH 59.14, +0.52) and Best Buy (BBY 46.47, +1.93) have acted as catalysts for the buying interest. The latter company's report, though, seems to be having a bigger impact at this time on the Consumer Discretionary sector (+0.7%) than Lehman's report is having on the financial sector (+0.3%). Currently, all 10 economic sectors are in positive territory, although none have gained more than 1.0%. The upside ranges from 0.2% to 0.7%.DJ30 +65.19 NASDAQ +6.55 SP500 +6.40 NASDAQ Dec/Adv/Vol 1124/1397/263 mln NYSE Dec/Adv/Vol 1064/1907/151 mln 10:00 am : Indices ease after up open, possibly reflecting caution ahead of Fed policy statement. Financial sector opened higher, but brokers overall are now negative. There was not much lasting support to the financial sector. Bond market is down again today, with the yield on the 10-year rising to 4.49%. Oil is $80.68 a barrel. DJ30 +34.63 NASDAQ +2.62 SP500 +4.20 NASDAQ Dec/Adv 1206/1271 NYSE Dec/Adv 1070/1880 09:45 am : Market opens up in line with futures indications, then dips just a bit. Lehman's earnings help the financial sector, and thus the broad market. PPI data was perhaps also supportive, but the 1.4% drop for August was due to a drop in energy prices of 6.6% that could well be reversed next month. Core PPI at 0.2% leaves the year-over-year rate at just 2.2%. DJ30 +42.9 NASDAQ +8.33 SP500 +5.77 09:16 am : S&P futures vs fair value: +7.0. Nasdaq futures vs fair value: +12.0. Futures suggest an up open. The Lehman earnings report could give support to the financial sector. 09:00 am : S&P futures vs fair value: +6.3. Nasdaq futures vs fair value: +12.0. Futures hold their gains. Market often goes into a holding pattern ahead of Fed announcement. 08:38 am : S&P futures vs fair value: +6.9. Nasdaq futures vs fair value: +12.5. Futures rise on Lehman earnings above average forecast. PPI -1.4% for August is seen as beneficial, but will be temporary as the 6.6% drop in energy prices is not sustainable. Core rate was in line with expectations at +0.2%. Oil is at $80.76 a barrel. 07:59 am : S&P futures vs fair value: -0.8. Nasdaq futures vs fair value: -0.2. Futures are fairly steady ahead of PPI report at 8:30 ET and FOMC policy decision this afternoon. 06:13 am : FTSE...6214.50...+31.70...+0.5%. DAX...7478.57...-1.25...-0.0%. 06:13 am : S&P futures vs fair value: -1.5. Nasdaq futures vs fair value: +0.0. 06:13 am : Nikkei...15,801.80...-325.62...-2.0%. Hang Seng...24576.85...-22.49...-0.1%. 05:13 am : S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: -3.3.
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