Will FOMC Upend Positive Tone of Markets?

Equity markets posted a mixed session yesterday as volume slipped markedly. The NYSE saw volume contract by 18.33% while the NASDAQ’s volume contracted by 19.58%. The Dow Industrials (-0.14%) and S&P 500 (-0.20%) lost fractional ground while the NASDAQ (+0.06%) closed nearly flat on the day. Internals were clearly more negative though, as losers outpaced winners on both the NYSE and the NASDAQ, 2-1 and 9-4 respectively.

As counter intuitive as it may sound, yesterday’s performance, though uninspiring, was actually rather impressive given the move registered by markets in recent weeks.

In the last couple weeks markets have pierced their respective 50 DMA and 200 DMA with little in the way of friction. Given that backdrop, yesterday, a Monday ahead of the FOMC, would have been a day for a reset. However, though volume did slip rather significantly, markets did not reset lower.

Yesterday’s trade appears to be speaking of a “wait and see” attitude by investors as the FOMC begins its October meeting.

Earnings have largely come in better than consensus expectations, to the tune of roughly 65% thus far this earning season, providing a positive context for the investing terrain. All of that could very easily be upended by the FOMC on Wednesday afternoon, though I don’t expect that to happen. That little item aside, there are plenty of data points other than earnings for investors to focus on today. In order of relative importance for investors; Durable Goods, Case-Shiller, PMI Flash and Consumer Confidence. The deck has been cleared for tomorrow’s FOMC announcement as only the EIA Petroleum Status report is scheduled for release at 10:30 AM EST.

Photo @rlinger on Flickr