Don’t Fear the Fed: Dow Industrials Jump 100 Points, Hit All-Time High

Yesterday, a slightly more hawkish Fed caused stocks to pull back from their intraday highs. Today, all worries were set aside, as the S&P 500 and the Dow Jones Industrial Average hat their highest levels ever.

Bloomberg

The S&P 500 rose 0.5% to 2,011.36–an all-time high–while the Dow Jones Industrial Average gained 109 points, or 0.6%, to 17,265.99, also a record. The Nasdaq Composite advanced 0.7% to 4,593.43, while the small-company Russell 2000 finished up 0.5% at 1,159.27.

Of note today: Jobless claims fell to 280,000, their second-lowest level in 14 years, while the Philly Fed index showed an increase in plans to hire and future orders, even as the overall index fell.

ISI Group’s Dennis DeBusschere and Brian Herlihy think solid economic data will trump fear of the Fed:

We are solidly in the camp that views changes in Fed policy, barring something completely unexpected (sudden rate hike, significant shift in inflation or funds rate projections, etc.) as less important to markets today than at any time in the recent past. With QE winding down in the U.S., likely just about to get started in the Europe and China continuing its targeted stimulus programs, the world remains awash in available credit and facing low though likely increasing borrowing costs. The real question for investors going forward is how growth evolves from here and what that means for earnings and, to a lesser extent, risk appetites.

JPMorgan’s Jason Hunter sees no signs that the bull market is running out of steam:

The longer term view stays intact. Now more than five years into the rally from the 666 March 2009 low, there is no sign of a broad distribution pattern that would suggest the bull market is faltering. Within that advance, there have been multiple periods of trend deceleration similar to the current setup. Those periods saw higher frequencies of near-term pullbacks, a dynamic that we think could unfold into 2015…

Even if the cyclical rally continues to lose bullish momentum, the chart lacks a clear multi-month distribution pattern that would indicate a major trend change is imminent. Until that pattern forms, 5-10% corrections should be viewed as opportunities to add to core long exposure.

No sign of that now.