Threat Of Fed Rate Hike Sends US Stocks South

Threat Of Fed Rate Hike Sends US Stocks South

$SPY, $VXX

The S&P 500’s 1% decline Monday, and its 1.4% drop Thursday is a warning sign of deeper dives ahead, and the benchmark index is now -0.68% YTD the weakest performance since Y 2011.

The US Fed continues to hint it will raise its fed funds interest rates in December, the 1st hike since Y 2006, as the economy shows signs of healing from the Great Recession.

US stocks fell more than 10% in August from the May hhigh as China devalued its RMB Yuan, triggering investor fears that the world’s 2nd-biggest economy was in trouble. The market rebounded in October as central banks worldwide discussed stimulus plans.

The bounce has made stocks expensive compared with their earnings, and now looking for steeper declines off of the October highs.

Higher interest rates will boost demand for the USD making it more expensive than foreign currencies. That could hurt US exports, while corporate profits earned in foreign countries will look smaller.

The manner in which the US stock market’s moves in the next few weeks will have a big effect on its direction in Y 2016.

Thursday, US major market indexes finished at: DJIA -254.15 at 17448.07, NAS Comp -61.94 at 5005.08, S&P 500-29.03 at 2045.97

The S&P 500 (-1.4%) finished below its 200-Day MA at 2,064 (key support)

Volume: Trade was about average with about 850-M/shares changing hands on the NYSE.

• NAS Comp +5.7% YTD
• S&P 500 -0.6% YTD
• DJIA -2.1% YTD
• Russell 2000 -4.0% YTD

Stay tuned…’

HeffX-LTN

Paul Ebeling

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