Stocks extend gains to hit fresh session highs and then run into some
modest resistance. All ten sectors are posting a gain, led by
financials (+7.7%) and energy (+3.6%).
Earlier this session, the Fed conducted a $20 billion 28-day repo
operation. The move to add liquidity have helped the fed funds rate
slip to 3.50% after being at 7.00% earlier in the session, according to
Reuters. The current level still remains above the Fed's target rate
of 2.00%.
This session is dominated by strength in large-cap names, as traders
speculate larger companies are better positioned to navigate the
potential economic headwinds.
The small-cap Russell 2000 Index is up 0.9% and the mid-cap S&P 400
Index is up 1.2%. By comparison, the large-cap S&P 500 is up
nearly 3%.
The relative underperformance of small- and mid-cap names is causing
market breadth to be weaker than one might expect given the scope of
the major indices gains. Advancers outpaces decliners by 2-to-1 on the
NYSE, while Advancers hold only a slight 10-to-9 edge on the Nasdaq.
Third Quarter Performance Review: A total of 158 stocks within the
S&P 500 are posting a gain in the third quarter. Financial names
are among the leaders. Bond insurer MBIA (MBI) is up the most with a
massive 176% advance, followed by regional bank BB&T (BBT), which
is up 62%. Wells Fargo (WFC) has rebounded 53%, and Bank of America
(BAC) is up 41%.