Markets Hold Steady Despite Positive Beige Book Report

Markets held steady yesterday as the S&P 500 (NYSEARCA:SPY) finished up with a .03% increase, the Dow Jones Industrials (NYSEARCA:DIA) registered a -.10% decrease, and the NASDAQ (NASDAQ:QQQ) ticked up .34%.

The big news of the day was the release of the Fed’s “Beige Book” Report at 2PM Eastern yesterday; Dr. Bernanke and his Fedsters maintained that the US Economy wrapped up 2011 with positive growth and that the US Economy, compared with past reports is experiencing “ongoing improvements in economic conditions in past months.”  The report also outlined that consumer spending, manufacturing, and bank lending were rebounding slowly, and real estate was increasing ever so slowly as well.

Other good news yesterday included an increase in home builders' reports, coupled with a positive US Treasury auction in which 10 year bonds (NYSEARCA:TLT) were sold at record low yields of 1.90%.  30 year bonds were also sold at under 3% yields--astonishing might be an understatement.  I have said this before and I will say it again, how low can interest rates go?  At $12 billion worth of merchandise sold yesterday, it looks like the Treasury will at least be funded for a few weeks more.

Our friend Gold also increased half a percent to $1642.30 per ounce; it seems like rock bottom is not an option anymore for the precious metal.

In other (negative) news, ratings agency “Fitch” announced that there is a “significant chance” of downgrade for Italy (NYSEARCA:EWI). In other ongoing news, nobody seemed too surprised about the Fitch statement as Europe still has many problems regarding debt that just will not go away overnight!

Bottom Line:  Markets held steady yesterday after the euphoria of the “Santa Rally” and “First Five Days” of the new year; it will be interesting to see if the Bulls find a second wind to punch through yesterday’s wall and keep the trading lights green.  With modest US Economic improvement, more growth is certainly possible, however Europe remains a wild card and could derail us at any moment.  Stay tuned.

Disclaimer: Wall Street Sector Selector trades a variety of ETFs and positions can change at anytime.