The sole focus for the market today was Washington and doubts about the ability of the government to find a resolution to the fiscal cliff. The mood of investors has shifted dramatically since last Tuesday’s election. Sentiment over the economy is still positive but feelings related to the dealings of the two parties are decidedly negative. Selling pressure remained muted today. The issue is that there remains a dearth of buyers.
Fed Chairman Bernanke made statements today about continued efforts to be highly supportive of the housing industry. His statements led to a brief spike in the shares of homebuilders. Those gains were slowly given back over the course of the day. Expectations are building for QE3 to be hiked. The Fed implied the new QE3 purchase pace next year would be $85BN, no drop-off from the current QE3 + twist rate.
Treasuries rallied slightly as the apathy for stocks spread into the bond market for the second straight day. The Fed purchased $1.85BN worth of bonds today.
Commodities were mostly lower, with precious metals, crude, grains and natural gas trading lower. Gold was off 0.70% today and silver finished lower also.
Financials were the best performing sector on the day. Banks led the way higher for the space. The MBA mortgage report was favorable for banks through better than expected mortgage loan growth.
Source: PFS Group
