U.S. Stocks Reverse Course

The U.S. indices have reversed an early attempt at a post-FED buyback, plunging lower in mid-session trade. Markets continue to react from Wednesday’s FED Interest Rate Announcement and Jerome Powell’s presser. At this hour (1:00 PM EST), the DJIA, S&P 500 SPX, and NASDAQ are all trending hard to the bear.

Most major financial media outlets are suggesting that today’s sell-off is a product of the FED dispelling any notions of a late-year rate cut. Jerome Powell’s press conference Wednesday afternoon repeatedly stressed that the FED is happy with current policy and a forthcoming reduction in the Federal Funds Target Rate is improbable.

For many in the markets, an end-of-year rate cut appeared to be a safe bet. At one point Wednesday, the CME FedWatch Index assigned a 40.1% chance of a ¼ point December rate decrease. Powell’s comments threw serious doubts on this assertion, sending the odds of a December cut down to a current level of 38.0%.

Policy uncertainty has equities players running for the door, bailing out of stocks en masse.

The DJIA Is Flirting With Intermediate-Term Correction

It has been a challenging 24 hours for the DJIA. Sellers have taken control of the market and values are heading south. June E-mini DOW futures are bearing the brunt of the pain, with prices breaking through daily downside support.

Overview: The June E-mini Dow has put in a session low just beneath the 26150 level. If you are trading this market, keep a close eye on April’s Low (25976, not pictured). April’s low is a key level, as it coincides with the big round number of 26,000. If the DJIA continues to slide through today’s close and Friday’s open, 26,000 is likely to attract significant bids to the market and slow the bearish onslaught.