Top Trades Before the Fed
Traders geared up Wednesday for Federal Reserve Chairman Ben Bernanke’s last act. Economists polled by Bloomberg expect the outgoing central bank chairman–who made “quantitative easing” common knowledge–is expected to announce another $10 billion reduction in bond purchases. Many economists forecast that the Fed will cut $10 billion every month, thus weaning the economy off of the stimulus that many believe saved the banking system.
Jan. 29 at 9:55 AM
Some traders said they pulled their money from the market in advance of the 2p.m. announcement for fear that tapering triggers a sell-off.
Jan. 29 at 9:49 AM
Others put money into health care names with promising stories that they believed would be largely unaffected by macro conditions. Organovo Holdings, $ONVO, was up more than 20% in the down market. The company, which creates three dimensional human tissues, announced delivery of its first 3D liver tissue to a lab for testing this morning. It also announced that it was on target to generate revenue before the end of the year.
Jan. 29 at 9:45 AM
Still others tested technology. Freescale Semiconductor, $FSL, rose more than 16% on better than expected guidance during its earnings call. Technology stocks in general, however, took a beating. Powershares Technology ETF, $QQQ, was in the red this morning.
Jan. 29 at 9:55 AM
While traders hunted for value in what most assumed would be a down market, others bucked the trend. They bet against consensus forecasts for stimulus cuts, arguing that the economy was still too weak for aggressive tapering.
Jan. 29 at 9:02 AM
Recent economic indicators give some credence to that view. The Census Bureau announced yesterday that orders for long-lasting, “durable” U.S. manufactured goods fell 4.3% to $229.3 Billion. Economists had expected a 1.8% rise. However, consumer confidence is at the highest level since August and housing prices are up.
~ Catherine Holahan (@cholahan)
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