Markets sell off after Federal Reserve holds rates low

Stocks liked what they heard from the Federal Reserve about keeping rates low. But in the last hour sellers returned, pretty much wiping out early gains (shown in the Bigcharts widget on the right). The Dow gained only 30, advancers over decliners 4-3 & NAZ fell 2. Banks led the selling, the Financial Index dropped from 193 when the interest rate announcement was made.


S&P 500 FINANCIALS INDEX

Value 188.54

Change -2.89

% Change -1.5%

The Alerian MLP index had a good day, up 1½ to the 255s. It's down from the yearly high of 265 last week (271 showing is not a good number). The Dow Jones REIT Index pulled back almost 4 & has found it difficult making headway in the last 2 months. Junk bond funds were mixed. They had been making new highs until last week's sell-off. The VIX, volatility or fear index, has been volatile itself lately explaining recent weakness for many high yield securities. Treasuries sold off, taking the yield on the 10-year Treasury bond up 7 basis points to 3.56%. Some of that money may have been used to buy gold.


Alerian MLP Index --- 2 months




Dow Jones REIT Index --- 2 months





Buyers liked oil & gold. Oil held its gains taking it above 80 & gold closed in on 1100, another record. The chart for the gold ETF below shows gold's gain of 200 in just 2 months caused by weakness in the dollar. Extending low US interest rates as other countries (such as Australia) are raising interest rates is causing dollars to be sold. As long as US interest rates are low, the dollar can be expected to continue weak & thus encouraging gold buying. How to buy gold is becoming a hot topic again!

CLZ09.NYM

..Crude Oil Dec 09

..80.70

.. 1.10 ......(1.4%)

GCX09.CMX

..Gold Nov 09

..1,096.50

.. 12.20 ......(1.1%)

GLD (ETF) --- 2 months





The late day sell-off caught many by surprise but may be another one of those times of buying on the rumor & selling on the news. Dow cracked thru 10K a month ago & hasn't been able to stay above that level. Gold hitting record highs has to be hurting the stock markets.


Dow Jones Industrials --- 2 months