The Dollar Falls As The Central Bank’s Policy Shift

Published on

Commenting on the aftermath of the Central Bank’s policy shift and today’s trading Gorilla Trades strategist Ken Berman said:

Get Our Activist Investing Case Study!

Get The Full Activist Investing Study In PDF

Q2 2020 hedge fund letters, conferences and more

The Dollar Hit A 27-month Low In The Aftermath Of The Central Bank's Policy Shift

The major indices are all sporting modest gains at midday, with the Jackson Hole Symposium yesterday’s speech by Fed Chair Jerome Powell still being at the center of attention. Treasury yields plunged lower following yesterday’s rally, especially on the short end of the curve, while the dollar hit a 27-month low against a basket of currencies in the aftermath of the Central Bank's policy shift. Stocks started out the day in a bullish fashion, with the tech sector and the Nasdaq leading the way higher, but most of the key sectors are in the green in the relatively quiet environment.

Overseas stocks declined for the second day in a row, with the surprising resignation of Japanese Prime Minister Shinzo Abe weighing on Japanese and Asian stocks. In economic news, personal spending increased by slightly more-than-expected, just as personal income, and the previous readings of both indicators were also revised higher, which is great news for the consumer economy. The Chicago PMI beat the consensus estimate as well, with only the Core PCE Price Index missing expectations, just one day after the Fed’s paradigm shift with regards to inflation.

Market Wrap

Dow: 28,574, + 82 or 0.3%

S&P 500: 3,494, + 10 or 0.3%

Nasdaq: 11,692, + 67 or 0.6%

Russell 2000: 1,569 + 5 or 0.3%

Market breadth has been in line with the performance of the major indices this morning, with advancing issues outnumbering decliners by a 3-to-2 ratio on the NYSE at midday. Only 13 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 71 stocks hit new 52-week highs. The major indices have been hovering around their daily VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to a mixed and choppy afternoon. The key sectors continued to diverge this morning, but yesterday’s trends reversed, as financials pulled back slightly, together with the defensive healthcare and utilities sectors, while yesterday’s laggards, namely materials, energy-related issues, and tech stocks shined. Stay tuned!