EmailThe equity market forged ahead with modest gains Wednesday, aided by the better-than-expected ISM Services and ADP Employment Change reports, as well as a large decline in oil prices. True to form, volume wasn't that heavy.
The upside bias remains intact at this juncture with the S&P futures trading 0.5% above fair value.
Some market watchers might be inclined to tie the bounce to the successful debate performance last night by Mitt Romney. Political pundits largely agree that Mr. Romney won last night's debate.
Whatever one's perspective is, the rationale that this is a Romney rally doesn't hold up considering the market has pushed higher in recent weeks with Intrade odds reflecting a much higher probability that President Obama would be re-elected.
If anything, the upside bias is largely a product of more of the same: performance chasing and faith in the Fed put.
That faith will be on display today in the form of the FOMC Minutes, which will be released at 2:00 p.m. ET. This release itself should not be market moving given recent remarks from Fed Chairman Bernanke, who defended the policy decision; nonetheless, the minutes will be a reminder of the Fed's beneficence.
On a related note, the Bank of England and the ECB held policy meetings today. As expected, both central banks held key interest rates steady at 0.50% and 0.75%, respectively.
The press conference held by ECB President Draghi is currently taking place and he has once again reiterated that the euro is irreversible. The euro is currently up 0.4% against the dollar.
Spain held a relatively successful auction of 2-, 3- and 5-year debt; however, that has not benefitted its longer-term rates. Spain's 10-year yield is up 5 bps at 5.80%. Worries persist that Spain will delay a request for bailout assistance from the ESM.
Separately, initial claims for the week ended September 29 jumped to 367,000 from an upwardly revised 363,00 in the prior week. This was pretty close to the Briefing.com consensus estimate, which was pegged at 365,000, and follows form with initial claims levels that have been bounded between 350,000 and 400,000 for some time now.
Accordingly, there wasn't much response to the initial claims report. Continuing claims for the week ended September 22 held steady at 3.281 mln (Briefing.com consensus 3.273 mln).
Factory Orders for August (Briefing.com consensus -6.0%; prior +2.8%) will follow at 10:00 a.m. ET.
For now, it's more of the same with the market keeping the faith in its central bank ministers.
--Patrick J. O'Hare, Briefing.com
