The big news today was the announcement from the FOMC meeting and there were no surprises. Interest rates remain unchanged. The Fed says "near term risks to the economic outlook have diminished". Only one member of the committee voted to raise rates. Most Fed observers believe interest rates will remain unchanged until the December meeting, due to a reluctance to be seen as interfering with the presidential election.
Markets traded weakly all morning, but rebounded after the FOMC announcement to close roughly unchanged for the day. SPX closed down $3 at $2167 and RUT closed up $2 at $1219. The VIX declined slightly to 12.8%. Trading volume was much higher with 2.5 billion shares of the S&P 500 trading today. Trading volume rose 20% on the NYSE and increased 4% on NASDAQ.
$2160 appears to be a strong support level on SPX. The lower shadows of the candlesticks have been consistently hitting around $2160 and bouncing higher for about the last ten trading sessions.
Several significant economic reports were issued yesterday and today. Durable goods orders declined 4.0% in June, even worse than May's 2.8% decline. But on the flip side, real estate data continue to be positive. New home sales increased to an annualized rate of 592 thousand in June, up from 572 thousand. Pending home sales increased 0.2% in June, up from a negative 3.7%. The Case Schiller housing price survey stayed north of 5% with an annualized rate of 5.2% in May, down from 5.4%. The Conference Board's consumer confidence survey was flat for June at 97.3, virtually unchanged from May's 97.4. The real estate story remains positive, but general economic growth remains weak.
It will be interesting to see tomorrow's markets. Often the traders appear to consider the FOMC announcement overnight and come back the next day, moving strongly one way or the other. Have the markets been coiling for a spurt higher with the flat sideways trading of the past couple of weeks? Or are we due for a correction of an overbought market? In view of the weak economic data, I am inclined to the latter view.