How High Will This Market Go?

The Dow Jones Industrial Average finally gained enough ground to close at a new high yesterday. But a broad market advance that started at the opening ran into a brick wall following the Fed’s decision to keep interest rates at current levels. As the FOMC statement was digested, stocks sagged accordingly, and by the close, much of the early gains had vanished.

The bond market also contributed to the late selling of stocks as a spike in bond yields took the 10-year Treasury note to the highest yield since March 2009. And strong renewed selling of municipal bonds also had a huge impact on stock prices as muni yields spiked, as well.

In economic news, Duke University and CFO Magazine released a survey showing that, in December, chief financial officers had become more optimistic. And, according to the Census Bureau, November retail sales were better than forecasted, and the sentiment of small business owners improved to its highest level in three years. Producer prices rose to better-than-expected levels, and business inventories were higher, but failed to meet estimates.

In corporate news, Best Buy Co., Inc. (NYSE: BBY)‎ missed analysts’ earnings by a wide margin, and the stock fell 15%. Other electronic retailers saw their stocks fall with BBY: RadioShack Corporation (NYSE: RSH) fell over 3% and GameStop Corp. (NYSE: GME) was off .82%. Amgen, Inc. (NASDAQ: AMGN) rose 4.9% on positive results from its prostate cancer drug. And C.R. Bard, Inc. (NYSE: BCR) gained 4.1% after announcing that it expects double-digit earnings growth next year. Bard also announced a restructuring that will result in some job cuts, as well as a boost in its stock buyback plan. (more)