Techs Lead Rally Ahead of Fed

With the Fed's FOMC deliberating interest rates and a statement due tomorrow, investors apparently felt little reason to continue the waiting game, sending stocks soaring in the afternoon of Wednesday's session.

Led by technology stocks, the NASDAQ led all other indices in percentage gain, up 1.21% as compared to the Dow's +0.68%

Dow 13,427.73 +90.07; NASDAQ 2,605.35 +31.19; S&P 500 1,506.34 +13.45; NYSE Composite 9,848.91 +74.62

Traders may have simply seen the market in a short term oversold position, moving quickly to bolster positions and snatch up bargains. With the Fed on track to keep rates stable at 5.25%, the risk of a downturn has virtually been eliminated, so buyers got busy and a little bit of piling on ensued late in the day.

Internal indicators were mixed, as advancing issues trounced decliners by a nearly 3-1 margin, but new lows kept ahead of new highs for the second consecutive day - 240-166 - suggesting that this mini-rally may only be getting started.

The Fed, as inconsequential as this particular meeting may be, still holds some power, though that is debated vigorously by proponents on both sides of the issue. Detractors claim that the Fed is antiquated and that their interest rate adjustments are generally lagging reality by 6 months or more and do more harm than good. Adherents of Fed-policy economics see the Fed as a necessary market mechanism, providing stability in an otherwise volatile environment.

In either case, there shouldn't be much to complain about with rates in a still-accomodative range. Rate increases, even to 6%, would still be in a comfortable range, though the chances for either tightening or loosening are roughly the same - nil.

Some people who haven't yet gotten the memo are those trading oil futures, up again today by $1.20 to $68.97. Since it is summer, the oil nutjobs seem compelled to keep oil prices near historical highs. Some day, hopefully, they will get their just desserts when the world's people begin to awaken to the realities of oil politics and the truth about world reserves (hint: there's enough to last another 60 years easily).

Apparently, gold and silver traders are beginning to acquiesce to the reality that the bull market in metals and - commodities overall - is waning and likely over and done with. Both metals were down marginally, seemingly unable to rebound off recent selling sprees.