Hurry Up And Wait (FOMC Style)
The markets are mixed in early trading, with the Nasdaq a bit higher and the S&P 500 slightly lower.
The FOMC minutes from the last meeting will be released at 2PM EST today, and it again seems like trading volume will be even lower than normal as traders don't want to place big bets ahead of the news.
But these are just the minutes, not a policy announcement. I don't think we are going to hear too much of a change in sentiment from the Fed. They are leaning towards a September 'taper', but the decision remains data dependent. That means the next job report should be a big one, in terms of market impact.
Bond yields are inching higher as the slowly migrate towards the 3.0% level. The 10-year yield is near 2.85% this morning.
The volatility index is very high this morning given the slight drop in the market. The VIX is spiking 8% above the 16 level for the first time in about six weeks. Maybe traders are buying protection ahead of the FOMC minutes.
In economic news, July existing home sales came in better than expected at 5.39 million units. That's a 6.5% monthly jump.
In corporate news, Lowe's stocks is higher after beating earnings while Staple's is a big disappointment following the company's earnings miss.
Asia's markets were mixed overnight. Malaysia GDP came in below expectations at 4.3% and caused them to lower their 2013 growth forecast. India was also lower last night, falling to an 11-month low.
Also, Japan upgraded the nuclear leak classification to Level 3, which indicates a "serious radiation incident". I don't know why more people aren't worried about this. The radiation is leaking into the ocean. And I just ate sushi last night. Yikes.
Commodities are mostly lower with oil prices near $104.60 and gold prices weaker around $1367.
Trading comment: Yesterday's bounce wasn't even enough to propel the S&P 500 back above its 50-day moving average. And the mid-cap and small-cap indexes are sitting right on their 50-day support currently. So we will await the reaction to the FOMC minutes. If rates spike higher, we would expect it to be accompanies by weakness in stocks. In all, it still looks like the market needs to put in more time in this correction phase. But we still would view a pullback as healthy overall and hopefully will offer one more buying opportunity as we head into Q4 of the year.