STOCK MARKET WATCH, Thursday September 21

RECENT HOUSING AND INFLATION DATA SUPPORT FED PAUSE

The Fed lowered interest rates to a 46-year low of 1% and the prime rate stood at 4% before the Fed began a two-year credit campaign to raise rates that began in June 2004. The Fed boosted rates a record 17 consecutive times before deciding to pause at the last meeting on Aug. 8. Today the Federal Reserve decided to keep the Fed Funds rate at 5.25% with ample economic data to support their decision.

"With the lower inflation numbers and the weaker housing data, the odds have shifted towards the Fed doing nothing for the rest of the year," said David Wyss, chief economist at Standard & Poor's in New York. Wyss expects that the next Fed move would likely be a rate cut sometime next year. In its statement, the Fed continued to voice its concerns about inflation by repeating a phrase it had used at last month's meeting, that the Fed's rate setting panel "judges that some inflation risks remain."

-cut-

Today’s Market

The markets moved into positive territory in early morning trading as crude oil fell on a larger than expected build in distillate inventories to their highest levels since January 1999. Other support lifting the markets in morning trading was earnings from Oracle Corp. that topped analyst estimates and earnings for Morgan Stanley, which beat expectations with its best third quarter ever.

The markets continued their upward advance leading into the announcement of the Fed meeting but declined after the decision was released. The markets regained traction in afternoon trading and reversed course recovering most of the initial reactionary drop.

http://www.financialsense.com/Market/wrapup.htm

8:30 AM Initial Claims 09/16
Briefing Forecast 315K
Market Expects 310K
Prior 308K

10:00 AM Leading Indicators Aug
Briefing Forecast -0.3%
Market Expects -0.2%
Prior -0.1%

12:00 PM Philadelphia Fed Sep
Briefing Forecast 13.0
Market Expects 14.4
Prior 18.5

only in the fed world does 7 equal 10 :crazy:

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B0990165E%2D9F92%2D46A5%2DA8EF%2D61E24F0628AC%7D&dist=newsfinder&symbol=&siteid=mktw

WASHINGTON (MarketWatch) -- First-time applications for state unemployment benefits rose in the latest week by 7,000 to 318,000, the Labor Department said Thursday. But the four-week average of continuing jobless claims hit its lowest level in a month during the week ending Sept. 9, falling to 2.47 million, the government said. The weekly number fell even further, by 29,000 to 2.46 million, according to a Labor Department report. The four-week average of new claims was unchanged at 315,000.

SINGAPORE - Oil prices rebounded slightly Thursday as traders took advantage of a drop in prices the day before sparked by a surge in U.S. distillate supplies.

-cut-

Light sweet crude for November delivery rose 31 cents to $61.05 a barrel in midafternoon Asian electronic trading on the New York Mercantile Exchange. November Brent crude on London's ICE futures exchange rose 24 cents to $60.71 a barrel.

Prices on Wednesday briefly fell below $60 a barrel — the level
OPEC has hinted could initiate an output cut. The October crude futures contract, which expired Wednesday, settled $1.20 lower at $60.46 a barrel, after the U.S. government released data showing healthy crude inventories and a surge in domestic supplies of distillate fuels, which includes diesel and heating oil.

Shum said the price drop was not unusual, as this time of year usually represents a seasonal lull in pricing between the end of the U.S. summer peak driving season and the start of the winter months in the United States and Asia, when demand for heating oil picks up.

more

LONDON (Reuters) - Oil prices edged higher on Thursday after hitting six-month lows the previous session, but big U.S. fuel stocks and hopes talks with Iran could avert a crisis over its nuclear program weighed on sentiment.

-cut-

On Wednesday, the expiring front-month U.S. contract touched a low of $59.80 before settling at $60.46, its lowest settlement since March 20 -- and around $18 below the U.S. record of $78.40 hit in July.

The price fall is the sharpest in 15 years and has increased expectations the Organization of the Petroleum Exporting Countries might act to curb supplies -- although opinion is divided on the price level that would trigger an output cut.

-cut-

He predicted some of the surplus of available oil would move to Asia and could help to put a floor under prices.

more

SAN FRANCISCO (MarketWatch) -- Amaranth Advisors LLC told investors on Wednesday that it has sold its entire energy-trading portfolio after losing more than $3 billion earlier this month in the natural-gas market.

Amaranth didn't say who bought the portfolio, but a source familiar with the situation said J.P. Morgan Chase and Citadel Investment Group, a big, Chicago-based hedge fund firm run by Ken Griffin, have acquired the positions.

"In order to prevent further mark-to-market losses on the natural gas positions, and to reduce the risk of defaulting on margin calls, we transferred these positions to a third party at a price that resulted in additional significant losses," Amaranth founder Nick Maounis wrote in an email notice to investors Wednesday evening.

http://www.marketwatch.com/news/story/Story.aspx?guid=%7BE5FE0DE4-BFE4-4081-8604-755143FDB4B7%7D&siteid=

3M Co., Goldman Sachs Group Inc. and San Diego County's retirement fund say the meltdown of Amaranth Advisors LLC, the hedge-fund manager that lost about $4.6 billion in the past month, may cost them millions.

The $9.2 billion pension fund of 3M, maker of Post-it Notes and electronics and cleaning products, gave less than $92 million to Amaranth, according to Jacqueline Berry, a spokeswoman for the St. Paul, Minn.-based company. Goldman Sachs Hedge Fund Partners LLC has about $13 million with the firm, according to a regulatory filing yesterday.

The San Diego County Employees Retirement Association's $7.2 billion fund invested $175 million with Amaranth in 2005.

Amaranth, named for an imaginary flower that never fades, had gained more than 25 percent earlier this year on bets natural-gas prices would rise. Prices tumbled this month, triggering losses that grew as it scrambled to unwind trades. The Greenwich, Conn.-based firm's blowup is the biggest since Long-Term Capital Management LP almost collapsed in 1998.

http://www.thejournalnews.com/apps/pbcs.dll/article?AID=/20060921/BUSINESS01/609210307/1066

http://www.marketwatch.com/News/Story/3fF5Tx5KdDLtvsjgdd8lGFb?siteid=mktw&dist=morenews&print=true&dist=printTop

<snipping past what we have already heard>

"There's a lack of knowledge about energy trading, which has been a recipe for disaster," he said. "There are some people that have knowledge, but Amaranth probably wasn't in that league."

Unlike Amaranth, which reportedly borrowed money to magnify its bets, most energy hedge funds avoid leverage, especially in very volatile markets such as natural gas, he explained.

Last year, Citadel and Ritchie lost more than $100 million on energy positions when Hurricane Katrina triggered a surge in crude and natural gas prices, Fusaro noted, adding that several European funds pulled out of energy trading after Katrina-inspired losses.

"Now we have hedge funds with long positions in a natural gas market that has oversupply and mild weather," he said. "That's another recipe for more losses."

...more...

:donut: :donut: :donut:

It's time to get moving. I hope today's trading piques your sense of adventure. There seems to be a fair amount of conflicting data in the news.

Ozy :hi:

:donut: and lurkers. I don't care what the Chinese calender says...it is the year of the bat here in Texas. Earlier we had one 16yo boy die of rabies after he was bitten by a bat that had flown into his bedroom. They discovered a colony of bats in his high school. Some of the bats were rabid, most tested were not. Last week a bat bit a music teacher in the neck as he was opening the music room at another high school. Since they could not locate the bat, the teacher had to start the rabies series. And this morning, yet another high school in the outlying areas have bats.

Sadly folks have adopted a kill first ask later attitude. I really love bats (and some of God's other less cuddly creatures). They can feast on all the mosquitoes they want as far as I am concerned. In Austin, there is a colony that roosts under a bridge and it is a site to see at sunset as they fly out. When we lived in NM we say the bats fly out of Carlsbad Cavern-also a site to see. Who needs the swallows at Capistrano-we have the bats in Austin and the vultures in Amarillo.

Happy hunting and watch out for the bears.

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 85.53 Change -0.34 (-0.40%)

How a Drop in Natural Gas May Lead to a Rally in Yen

http://www.dailyfx.com/story/special_report/special_reports/How_a_Drop_in_Natural_1158758802266.html

The Hidden Dangers of High Returns

News this week that a 32 year old Canadian energy trader by the name of Brian Hunter recently lost approximately $5 Billion dollars in a period of only one week in the natural gas market caused an uproar on Wall Street.

Investors in Amaranth Advisors – the Connecticut based multi billion dollar hedge fund for which Mr. Hunter continues to trade, saw the value of their investment decline by 35% after being up as much as 20% this year -- an overall drawdown of 50% all in a remarkably short period of time Some institutional clients such as the San Diego County Employees Retirement Association were badly hurt. SDCERA which oversees more than $7 billion on behalf of retirees and employees of the county, invested $175 million in Amaranth last year, according to hedge fund industry publication Alpha magazine. But with Amaranth down about 35% so far in 2006, SDCERA may have lost more than $50 million on its investment this year alone.

While Amaranth’s fate underscores the volatile nature of the hedge fund business (in a great example of understatement, SEC Chairman Christopher Cox stated., “Big losses at Amaranth Advisors LLC demonstrate that investing in hedge funds can be risky”) it may also contain wider ramifications, impacting other seemingly unrelated markets such as foreign exchange.

Amongst financial instruments the natural gas market is not very large. Average daily volume is approximately 10,000 contracts with notional value of little more than $50,000 per contract translating into about $500 Million of daily turnover. Open interest at present is nearly 79,000 contracts with total notional value of just $4 Billion. At first glance this data only confirms the extreme concentration of Mr. Hunter’s positions and highlights the massive amount of risk implied in his bets. However, the illiquidity of the natural gas market and the sheer size of Mr. Hunter’s losses also demonstrates Amaranth’s central problem – how to unwind these positions in an orderly fashion?

...more...

FOMC Decision Leaves Dollar Mixed

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/FOMC_Decision_Leaves_Dollar_Mixed_1158788182143.html

US Dollar
As expected Federal Reserve officials kept the benchmark interest rate at the current 5.25 percent, for the second month, leaving the potential for further rate hikes in the near term in subsequent statements. Although it does shed a light of optimism for the greenback, the probability of a rate hike scenario continues to dwindle with each and every session. Every market participant knows central bankers are looking for positive data in reinforcing the notion of growth in the world’s largest economy. However, reports have been less than exemplary, showing nothing but declines and weakness for the past quarter. The notion includes this morning’s MBA mortgage applications which rose 2 percent. Although positively gaining on the week, the overall trend for applications has been in line with the longer term decline that has been shaping up in the recently weaker housing sector. Subsequently, it coincides with downward revisions in both the housing sector and consumer spending, both which reported less than expected increases for the month. But acting as the perpetual last straw, Chairman Ben Bernanke and fellow FOMC members admitted that “inflation pressures are likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations and the cumulative effects of monetary policy actions.” Coupled with a housing slump and the evidence is quite clear backing the notions of an end to the tightening policy for almost the past two years. Now, following the recently bearish trade deficit figures, the announcement may dictate that dollar bearishness is finally upon us. However, the notion also requires that additional economies sport higher and more positive figures, like in Germany and Japan. With growth tepid in both regions, much like the rest of the world, one could ask whether or not the Fed decision was indeed in response to the US based slowdown or protection from a more global downturn, keeping the dollar supported for the moment.

...more...

http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-09-21T095438Z_01_L21447213_RTRIDST_0_MARKETS-BONDS-BBA-UPDATE-1.XML

LONDON, Sept 21 (Reuters) - The global market in credit derivatives will expand to $33 trillion by the end of 2008, the British Bankers' Association (BBA) said in a report on Thursday.

The report, based on a survey of market leaders, says the market remains dominated by credit default swaps -- the simplest credit derivative contract, comprising insurance against default on underlying corporate bonds.

Default swaps account for 33 percent of the market, the BBA says, while index trades account for 30 percent and synthetic structured products for 12.5 percent.

The BBA figures contrast with findings from an International Swaps and Derivatives Association survey which earlier this week put the global credit derivatives market at $26 billion at the end of the first half of 2006.

Within the structured credit market, credit ratings quality is falling, the BBA says, perhaps reflecting the increased participation of hedge funds seeking higher returns.

Hedge funds' share of trading volume has almost doubled since 2004, to 28 percent. Banks account for 59 percent of activity and pension funds just 2 percent.

...more...

This amount of speculation money is what drives the ups and downs of wall street gamblers.

thanks to Judi Lynn and this DU thread:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2522541

http://www.chron.com/disp/story.mpl/ap/nation/4203454.html

HOUSTON — Former Enron CEO Jeffrey Skilling was ticketed for public intoxication earlier this month in Dallas, according to a newspaper report.

Skilling, convicted in May of 19 counts of fraud, conspiracy, insider trading and lying to auditors in the investigation following the company's 2001 collapse, was arrested about 1:45 a.m. Sept. 9, according to a report in Wednesday's online edition of the Houston Chronicle.

The police report said Skilling was not drinking at the time of his arrest, and he did not resist officers, the newspaper said. He was in the swanky Uptown neighborhood north of downtown Dallas; Skilling was staying at a nearby town house he owns.

Public intoxication is a misdemeanor, punishable by a fine of up to $500. He received a $385 ticket and was briefly detained in a city jail.

...more...

Creditors can go after Enron figure's estate

Enron Corp. creditors can attempt to collect $1.3 million from the family of former Vice Chairman Cliff Baxter, who committed suicide two months after the energy trader collapsed in 2001.

Baxter was paid in November 2001 under a deferred-compensation program available to some Enron executives, a month before the Houston-based energy trader filed the second-biggest bankruptcy ever in the U.S. Baxter died of a self-inflicted gunshot wound Jan. 25, 2002, in Sugar Land. He was 43.

U.S. Bankruptcy Judge Arthur Gonzalez said in a ruling dated Sept. 15 that Enron's creditors can recover the funds because Baxter, an insider, was paid within 90 days of the energy company's bankruptcy filing. The creditors must next litigate the matter in Texas Probate Court.

"Although we are gratified by the court's ruling, this case is tragic on many levels, and no one is pleased under the circumstances," Ronald Sussman, a lawyer for the creditors, said Tuesday in a statement.

<snip>

http://www.chron.com/disp/story.mpl/business/4199961.html

He seemed to be the only exec that had any remorse about what had been done.

Hedge fund's bad bet to hurt Pa., N.J. pensions
Amaranth Advisors' wrong guess on natural-gas futures will generate losses of 35%, it told investors.

By Joseph N. DiStefano
Inquirer Staff Writer

State pension funds in Pennsylvania and New Jersey are among the U.S. investors bracing for losses due to bad bets on natural-gas futures by Amaranth Advisors L.L.C., one of the nation's largest hedge funds.

Amaranth, which managed about $9 billion, told investors earlier this week that it expected losses of more than 35 percent because of a drop in natural-gas futures that took its trading desk by surprise.

http://www.philly.com/mld/inquirer/business/15568248.htm

Easy come, easy go....

the same folks who would handle investments in the "privatization of Social Security"?

NEW YORK - Huge trading losses at Amaranth Advisors belie the notion that "multistrategy" hedge funds are safer than their single-strategy peers and could lead to calls for more transparency and controls, experts said Tuesday.

The $9 billion Amaranth fund told investors its year-to-date losses may top 35 percent as a result of wrong-way bets the price of natural gas would rise. The losses will almost certainly overshadow gains in any of its other strategies and seriously threaten the future of the fund.

<snip>

"Fifty percent is a yardstick that some people use to say that once you have dropped that much, the game is over," said Roger Ehrenberg, chief operating officer of Monitor110, a data provider for institutional investors.

<snip>
Proponents of hedge funds argue the strategy is safer than long-only funds because investments are "hedged," meaning buy-and-hold investments are balanced against those investments that may decline in value. Such "market-neutral" funds can theoretically make money in up markets or down.

<snip>
http://www.chron.com/disp/story.mpl/business/4199895.html

can someone explain to me why folks think hedge fund are suppose to be good. Why are folks so hot to invest in them.:shrug:

sorry....

WASHINGTON -- The number of newly laid-off workers filing for unemployment benefits rose last week by the largest amount since early August, providing further evidence that economy has slowed.

The Labor Department said that 318,000 workers filed claims for jobless benefits, up by 7,000 from the 311,000 benefit applications filed the previous week. It followed two weeks of small declines in claims and was the biggest increase since jobless claims had risen by 10,000 in the week ending Aug. 5.

The increase was slightly higher than economists had been expecting and provided fresh evidence that the economy has been slowing this year under the impact of rising energy prices, high interest rates and a cooling housing market.

<snip>
http://www.chron.com/disp/story.mpl/business/4203750.html

I'm shocked:sarcasm:. I would put this in my suprised eCONomist file but it's full:eyes:

AUSTIN — The Texas unemployment rate inched down to 5.1 percent in August after two straight months of small increases, the Texas Workforce Commission said today.

Following are the preliminary August unemployment rates with revised July figures in parentheses for Texas metropolitan areas. The figures are not seasonally adjusted.
<snip>

Abilene 4.5 (4.7)

Amarillo 4.1 (4.3)

Austin-Round Rock 4.2 (4.4)

Beaumont-Port Arthur 6.5 (7.0)

Brownsville-Harlingen 6.7 (7.3)

College Station-Bryan 4.2 (4.5)

Corpus Christi 5.5 (5.9)

Dallas-Plano-Irving 5.0 (5.3)

El Paso 7.1 (7.5)

Fort Worth-Arlington 4.9 (5.3)

Houston-Baytown-Sugar Land 5.1 (5.5)

Killeen-Temple-Fort Hood 5.7 (6.0)

Laredo 5.6 (6.1)

Longview 5.0 (5.6)

Lubbock 4.3 (4.8)

McAllen-Edinburg-Mission 7.1 (7.8)

Midland 3.8 (4.0)

Odessa 4.4 (4.7)

San Angelo 4.8 (5.0)

San Antonio 4.8 (5.3)

Sherman-Denison 4.9 (5.3)

Texarkana 5.4 (5.8)

Tyler 4.6 (4.8)

Victoria 4.6 (4.9)

Waco 5.0 (5.4)

Wichita Falls 4.7 (5.0)

http://www.chron.com/disp/story.mpl/business/4189851.html

Is it just my imagination, or are ALL those numbers revised up?

Energy, Wal Mart, indexes touching highs of all time

I love this stuff

so say experts on Kulow show.

Highlights

Current:



30-day and 90-day vs.greenback:



30-day vs. Euro, Yen, UK Pound and Swiss Franc




Currency Comparison: http://members.shaw.ca/trogl/looniewatch.html

Detailed analysis: http://quotes.ino.com/exchanges/?r=CME_CD

Up-to-the-minute graph: http://quotes.ino.com/chart/?s=CME_CD.H06&v=s

Historical values http://www.x-rates.com/d/USD/CAD/data30.html

2006-08-21 Monday, August 21 0.894214 USD
2006-08-22 Tuesday, August 22 0.89662 USD
2006-08-23 Wednesday, August 23 0.900901 USD
2006-08-24 Thursday, August 24 0.90009 USD
2006-08-25 Friday, August 25 0.90269 USD
2006-08-28 Monday, August 28 0.899281 USD
2006-08-29 Tuesday, August 29 0.90009 USD
2006-08-30 Wednesday, August 30 0.900982 USD
2006-08-31 Thursday, August 31 0.903669 USD
2006-09-01 Friday, September 1 0.904486 USD
2006-09-04 Monday, September 4 0.904486 USD
2006-09-05 Tuesday, September 5 0.900009 USD
2006-09-06 Wednesday, September 6 0.904814 USD
2006-09-07 Thursday, September 7 0.900982 USD
2006-09-08 Friday, September 8 0.893575 USD
2006-09-11 Monday, September 11 0.891583 USD
2006-09-12 Tuesday, September 12 0.893975 USD
2006-09-13 Wednesday, September 13 0.893575 USD
2006-09-14 Thursday, September 14 0.896218 USD
2006-09-15 Friday, September 15 0.893495 USD
2006-09-18 Monday, September 18 0.895335 USD
2006-09-19 Tuesday, September 19 0.890551 USD
2006-09-20 Wednesday, September 20 0.887154 USD


Current values

Last trade 0.8956 Change +0.0067 (+0.75%)
Previous Close 0.8886 Open 0.8925
Low 0.8923 High 0.8961


Blather (from http://quotes.ino.com/exchanges/?r=CME_CD)

The December Canadian Dollar was higher overnight due to short covering as it consolidates some of this week's decline but remains below the 10-day moving average crossing at .8074. Stochastics and the RSI are oversold but remain neutral to bearish hinting that additional weakness is possible. If December extends this week's decline, the reaction low crossing at .8835 is the next downside target. Closes above the 20-day moving average crossing at .8997 would confirm that a short-term low has been posted. Overnight action sets the stage for a higher opening in early-day session trading.


Analysis

I'm only posting 'cause the graphs look really silly right now. The loonie apparently lost a lot of value over the last 24 hours and is in the process of gaining it back. In the current snapshot it appears to be falling and rising simultaneously.

Dow 11,533.23 79.96 (0.69%)
Nasdaq 2,237.75 15.14 (0.67%)
S&P 500 1,318.03 7.15 (0.54%)
10-Yr Bond 4.648% 0.081

NYSE Volume 2,642,946,000
Nasdaq Volume 2,049,060,000

As expected, the Federal Reserve left interest rates unchanged at 5.25% for a second straight month. However, since another pause was largely priced into the market and the accompanying policy statement brought no surprises, investors refocused on the intraday catalysts -- strong earnings and plummeting oil prices -- to forge a broad-based rally.

As evidenced by the tech-heavy Nasdaq greatly outpacing its blue chip counterparts, software giant Oracle Corp (ORCL 17.93 +1.80) beating analysts' expectations Tuesday night and "exceeding guidance on every metric" was the headline that kick-started the session. To wit, Technology soared back into positive territory for the year in convincing fashion by turning in the best performance (+1.7%) among the eight sectors posting gains.

Even though Morgan Stanley (MS 72.35 +0.50) closed well off its intraday levels (+2.5%), the stock still finished at its best level in five years after handily topping Wall Street's estimates and providing notable support for the S&P most influential sector -- Financials. The investment bank's record revenues resulted in 61% year/year EPS growth, lending some optimism about a 13th straight quarter of double-digit profit growth for the S&P 500.

Further playing into the market's improved profit prospects was a 2.0% sell-off in oil prices. Crude oil futures for October delivery, which expired today, briefly slipped below $60 a barrel before closing at $60.46 a barrel (-$1.20) after the Energy Dept. reported a larger than expected build in weekly distillate supplies to their highest levels since January 1999. Since that bodes well for consumers ahead of the winter heating months and eases Fed concerns about the potential for high energy prices to sustain inflation pressures, investors were able to look past a 2.4% drubbing in the Energy sector as it became apparent that more money continued to flow out of Drillers (-3.9%) and Refiners (-3.4%) -- two of today's worst performing S&P industry groups -- and into beaten-down areas throughout tech. DJ30 +72.28 NASDAQ +30.52 SP500 +6.87 NASDAQ Dec/Adv/Vol 1114/1933/2.21 bln NYSE Dec/Adv/Vol 1131/2133/2.54 bln

3:30 pm : With only a half hour left to go, the market has now recouped everything that was relinquished following the Fed announcement, as sellers remain sidelined going into the close. The Nasdaq leads the way among the majors and is well on pace for its eighth advance in nine sessions with a 1.3% gain while the S&P 500 is within 1 point of hitting a new five-year high.DJ30 +74.13 NASDAQ +30.33 SP500 +7.82 NASDAQ Dec/Adv/Vol 1134/1861/1.91 bln NYSE Dec/Adv/Vol 1151/2096/2.1 bln

3:00 pm : After temporarily flirting with their worst levels of the day, the indices are trying to regain some upward momentum heading into the final stretch. Among the most notable areas of weakness accounting for the recent pullback has been Energy (-2.1%), as the October contract briefly slipping below $60 a barrel and expiring down 2.0% at $60.46 leaves Drillers (-2.8%), Refiners (-2.8%), Oil & Gas Equipment (-2.7%) and Explorers (-2.6%) as four of today's worst performing S&P industry groups. A reversal in Morgan Stanley (MS 71.60 -0.25), which was up as much 2.5% after becoming the fourth investment bank this month to beat analysts' estimates, has also taken some steam out of a more impressive performance on the part of the bulls that had the S&P 500 at a 52-week high intraday less than an hour ago.DJ30 +59.32 NASDAQ +25.72 SP500 +5.92 NASDAQ Dec/Adv/Vol 1187/1801/1.72 bln NYSE Dec/Adv/Vol 1196/2030/1.88 bln

2:30 pm : Stocks continues to weaken as the policy statement leaves the door open for more tightening at the next FOMC meeting on October 24-25. Richmond Fed President Jeffrey Lacker again becoming the only member preferring a 1/4% hike also makes the pause less compelling. The actual text of the statement reads: "The moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market."

Readings on core inflation have been elevated, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information." DJ30 +52.99 NASDAQ +23.68 SP500 +5.68 NASDAQ Dec/Adv/Vol 987/1968/1.55 bln NYSE Dec/Adv/Vol 949/2265/1.69 bln

2:15 pm : As expected, the Federal Reserve left the fed funds rate unchanged at 5.25%, marking a pause in tightening for a second straight month. With respect to the accompanying policy directive, the Fed has asserted that moderation in economic growth appears to be continuing, but since some inflation risks remain, additional firming may be needed to address these risks depending on incoming data. Initial responses in both the stock and bond markets has been slightly negative, as equities give up some of the recent gains that were building into the report and Treasuries relinquish all of their gains and are now unchanged. Market action, though, is expected to be volatile throughout the rest of the session.DJ30 +68.12 NASDAQ +29.27 SP500 +7.33 NASDAQ Dec/Adv/Vol 986/1971/1.43 bln NYSE Dec/Adv/Vol 987/2221/1.55 bln