The major averages ended the midweek session with slim gains after showing some intraday volatility in reaction to the release of the latest policy directive from the Federal Open Market Committee. The S&P 500 added 0.1%, while the relative strength among small caps sent the Russell 2000 higher by 0.3%. 

 

Equities spent the first half of the session near their flat lines as participants stuck to the sidelines ahead of the FOMC statement, which conveyed no changes to the Fed's current policy course. The indices surged after the statement crossed the wires, but returned near their flat lines by the close. 

 

As expected, the Fed reduced the monthly pace of its asset purchases by $10 billion to $15 billion, setting expectations for the program to be wound down at the next meeting. Furthermore, the Fed maintained the "considerable time" language in its forward guidance, suggesting the first rate hike remains somewhat distant. On that note, the economic projections that were also released indicated the Fed sees the fed funds rate at 1.375% at the end of 2015. 

 

The policy statement weighed on Treasuries (10-yr yield +3 bps to 2.62%), while giving a boost to the greenback. The Dollar Index (+0.6%) climbed to its best level since last June at the expense of other major currencies. Notably, the dollar/yen pair soared from the 107.15 area to 108.30. 

 

Seven of ten sectors posted gains with materials (+0.6%) ending in the lead. The growth-sensitive sector was underpinned by steelmakers after U.S. Steel (X 45.61, +4.20) boosted its guidance. The Market Vectors Steel ETF (SLX 49.20, +0.43) advanced 0.9%. 

 

Meanwhile, the other commodity-linked sector--energy (-0.5%)--ended at the bottom of the leader board following its recent out performance. The sector narrowed its week-to-date gain to 1.4% and was pressured by a 0.6% decline in the price of crude oil ($94.33/bbl). 

 

Elsewhere, the remaining cyclical sectors ended on a mixed note. Financials (+0.4%), industrials (+0.4%), and technology (+0.2%) displayed relative strength, while consumer discretionary (unch) ended a bit behind the broader market. 

 

The industrial sector outperformed from the start with better than expected earnings from FedEx (FDX 159.71, +5.05) providing support. Shares of FDX jumped 3.3%, while the broader Dow Jones Transportation Average gained 1.0%. Airlines bucked the trend, which was a bit surprising considering the decline in the price of crude. Delta Air Lines (DAL 38.94, -0.58) and JetBlue Airways (JBLU 11.20, -0.21) lost 1.5% and 1.9%, respectively. 

 

Also of note, the discretionary sector finished just behind the market, but that masked the strength among homebuilders. The industry group rallied in reaction to better than expected results from Lennar (LEN 41.40, +2.27). The stock surged 5.8%, while the iShares Dow Jones US Home Construction ETF (ITB 24.13, +0.54) settled higher by 2.3%. 

 

Today's participation was ahead of recent averages with more than 650 million shares changing hands at the NYSE. 

 

Economic data included CPI, NAHB Housing Market Index, Q2 Current Account Balance, and the weekly MBA Mortgage Index: 

The CPI report for August revealed a 0.2% decline, while the Briefing.com consensus expected an unchanged reading 

This was the first decline in total CPI since April 2013, driven by a 2.6% decline in the energy index 

Core CPI, meanwhile, was flat against a 0.2% uptick expected by the consensus 

The NAHB Housing Market Index for September rose to 59 from 55, while the Briefing.com consensus expected an increase to 56 

The current account deficit for the second quarter totaled $98.50 billion while the Briefing.com consensus expected the deficit to hit $114.50 billion 

The first quarter deficit was revised to $102.10 billion from $111.20 billion 

The weekly MBA Mortgage Index jumped 7.9% to follow last week's 7.2% drop 

Tomorrow, weekly Initial Claims (Briefing.com consensus 305K) and August Housing Starts (consensus 1045K)/Building Permits (expected 1054K) will be released at 8:30 ET, while the Philadelphia Fed survey for September (consensus 23.5) will cross the wires at 10:00 ET. 

Nasdaq Composite +9.2% YTD 

S&P 500 +8.3% YTD 

Dow Jones Industrial Average +3.5% YTD 

Russell 2000 -0.8% YTD

 

Time	Cur.	Imp.	Event	Actual	Forecast	Previous
Thursday, September 18
08:30	USD		Building Permits		1.045M	1.057M
08:30	USD		Building Permits (MoM)		-0.4%	8.6%
08:30	USD		Continuing Jobless Claims		2,470K	2,487K
08:30	USD		Housing Starts		1.040M	1.093M
08:30	USD		Housing Starts (MoM)		-4.4%	15.7%
08:30	USD		Initial Jobless Claims		305K	315K
08:30	USD		Jobless Claims 4-Week Avg.			304.00K
08:45	USD		Fed Chair Yellen Speaks
09:45	USD		Bloomberg Consumer Confidence			36.5
10:00	USD		Payrolls Benchmark, n.s.a.			347.00K
10:00	USD		Philadelphia Fed Manufacturing Index		23.0	28.0
10:00	USD		Philly Fed Business Conditions			66.4
10:00	USD		Philly Fed CAPEX Index			17.50
10:00	USD		Philly Fed Employment			9.1
10:00	USD		Philly Fed New Orders			14.70
10:00	USD		Philly Fed Prices Paid			24.90
10:30	USD		Natural Gas Storage		90B	92B
13:00	USD		10-Year TIPS Auction			0.249%
18:00	USD		Semi Book/Bill Ratio

Earnings Reports for Thursday September 18