Fed Tapers While GDP Slows: Not So New-sy

fed taper effectsOn the same day that investors received confirmation that the economy slowed to a crawl (advance Q1 GDP logged in at +0.1), they also received word that the fed taper will continue with the Federal Reserve tapering its bond buying program by another $10 billion per month.

Here’s Pedro da Costa having some fun on twitter with the meaning of “taper.”

On the surface this news would appear to be quite bearish.  But the fed taper has been a “gradual narrowing” and on investor’s minds for some time. Therefore, the taper/GDP numbers were mostly priced in and non-factors today. By day’s end, equities were slightly higher across the board:

  • Dow Jones Industrial Average:  16,580.84  (+0.28%)
  • S&P 500:  1883.95  (+0.30%)
  • NASDAQ Composite:  4,114.56  (+0.27%)

Commodities were dinged a bit, with Crude Oil and Precious Metals slipping. One could argue that the Fed’s decision to taper their bond buying program by another $10 billion per month weighed on commodities, but that news was expected. Better to focus on key technical price points and fundamental catalysts.  News on the Russian-Ukraine showdown is still an on-again-off-again  factor, and the upcoming European elections will likely stir financial markets across the board.

News of the Dow Jones closing at record highs won the media’s heart, but the S&P 500 closed near key resistance at 1885 and another layer resides at 1900. So, how the index performs into next week will likely play a key role in whether the rally continues.

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.