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S&P 500 and Dow close at record highs following FOMC statement
17-Mar-21 16:20 ET
Dow +189.42 at 33015.37, Nasdaq +53.64 at 13525.22, S&P +11.41 at 3974.12

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The S&P 500 (+0.3%) and Dow Jones Industrial Average (+0.6%) closed at record highs on Wednesday, as the market reacted positively to the Fed's dovish policy statement in the afternoon. The Nasdaq Composite (+0.4%) and Russell 2000 (+0.7%) also posted modest gains, overcoming 1.5% and 1.3% intraday declines, respectively.

The intraday decline in the S&P 500 wasn't too bad (-0.4%), but there were signs of de-risking as all 11 of its sectors traded in negative territory at one point. The heavily-weighted growth stocks especially weighed on the Nasdaq as the 10-yr yield rose past 1.67%. Selling pressure, however, was relieved as soon as the FOMC statement was released at 2:00 p.m. ET.

The policy statement revealed no change to the fed funds rate (unanimous decision) and no change in the median estimate that the fed funds rate would remain unchanged through 2023. In addition, the Fed will continue to increase its holdings of Treasury and agency mortgage-backed securities by at least $120 billion per month, and the median estimate for the change in real GDP for 2021 was revised up to 6.5% from 4.2%.

In his press conference, Fed Chair Powell said it wouldn't be time to start talking about tapering asset purchases until the Fed sees substantial further progress in meeting its employment and inflation goals -- "actual progress" and not "forecast progress." Mr. Powell added that a transitory rise in inflation above 2% seems likely this year and the Fed will have something to announce on the supplementary leverage ratio (SLR) exemption in the coming days. There was a sense the Fed could extend the SLR exemption beyond the March 31 expiration.

Overall, the Fed communicated a patient and dovish approach to monetary policy that satisfied the market. Six of the 11 S&P 500 sectors closed in positive territory, the information technology sector (-0.1%) briefly turned positive after being down 1.6% intraday, long-term interest rates backed down from highs, and the U.S. dollar weakened (91.43, -0.45, -0.5%).

The cyclically-oriented consumer discretionary (+1.4%), industrials (+1.1%), energy (+0.9%), materials (+0.9%), and financials (+0.7%) sectors provided the leadership, while buying interest evaded the utilities sector (-1.6%).

The 10-yr yield settled at 1.64%, or two basis points above yesterday's settlement level. The 2-yr yield declined one basis point to 0.13%. WTI crude futures settled lower by 0.3%, or $0.20, to $64.61/bbl.

Separately, Lennar (LEN 100.95, +12.24, +13.8%) was one of today's biggest individual gainers with a 14% gain after announcing a $3-5 billion asset spinoff, confirming the formation of a $4 billion single family home rental platform, and beating EPS and revenue estimates. Lennar commented that demand for single family homes from former city dwellers is strong and growing.

Reviewing Wednesday's economic data:

Housing starts declined 10.3% month-over-month in February to a seasonally adjusted annual rate of 1.421 million units (Briefing.com consensus 1.550 million) and building permits declined 10.8% month-over-month to a seasonally adjusted annual rate of 1.682 million (Briefing.com consensus 1.750 million).
The key takeaway from the report is that the declines in single-unit starts were the worst in the Midwest (-30.5%) and South (-16.0%) regions, which were unduly impacted by the severe winter weather that hit in mid-February. That should take some of the sting out of the weak starts number for February, yet the fact that building permits (a leading indicator) for single-unit dwellings were flat to down in all regions is apt to create some concern that rising lumber costs and rising mortgage rates will lead to some slowing in the homebuilding industry.
The MBA Mortgage Applications Index decreased 2.2% following a 1.3% decline in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report, the Conference Board's Leading Economic Index for February, and the Philadelphia Fed Index for March on Thursday.

Russell 2000 +18.3% YTD
Dow Jones Industrial Average +7.9% YTD
S&P 500 +5.8% YTD
Nasdaq Composite +4.9% YTD

Market Snapshot
Dow 33015.37 +189.42 (0.58%)
Nasdaq 13525.22 +53.64 (0.40%)
SP 500 3974.12 +11.41 (0.29%)
10-yr Note -2/32 1.639
NYSE Adv 1772 Dec 1390 Vol 1.1 bln
Nasdaq Adv 2385 Dec 1593 Vol 5.4 bln

Industry Watch
Strong: Consumer Discretionary, Industrials, Financials, Materials, Energy
Weak: Utilities, Real Estate, Health Care, Information Technology, Consumer Staples

Moving the Market

-- S&P 500 and Dow Jones Industrial Average close at record highs following dovish FOMC policy statement

-- Fed kept rates and pace of asset purchases unchanged

-- No change in the median estimate that the fed funds rate would remain unchanged through 2023

-- Long-term interest rates backed down from session highs

Crude futures settle on lower note
17-Mar-21 15:25 ET
Dow +156.23 at 32982.18, Nasdaq +69.79 at 13541.37, S&P +10.88 at 3973.59

[BRIEFING.COM] The S&P 500 is trading higher by 0.3% while the Dow is up 0.5% at fresh all-time highs.

One last look at the sector performances shows consumer discretionary (+1.5%) and materials (+0.6%) up in the lead. The information technology sector trades flat after being down 1.6% intraday. The utilities (-1.4%), real estate (-0.5%), and health care (-0.2%) sectors still trade lower.

WTI crude futures settled lower by 0.3%, or $0.20, to $64.61/bbl.