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Investors tend to focus on the extremes. On one hand, has the Federal Reserve Bank allowed inflation to get out of control and needs to act immediately in order to lessen its impact? Or will the eventual tapering severely weaken the economy and we are confronted with the dreaded “stagflation?” In either case, it could have a devastating impact on the financial markets.

Why not a “soft landing”? Allow the economy to work through the supply chain issues created by the pandemic and take the foot of the pedal gradually with regard to monetary policy instead of slamming on the brakes.

Based on Wednesday’s price action, the aforementioned “goldilocks” scenario of a “soft landing” is not being ruled out by all investors. This was evidenced by the index almost making a new all-time closing high.

The bears gave it their effort in attempting to breach Tuesday’s low on a few different occasions. The last one came just after the Fed announcement, with the “make a new low by a tick trick.” Before the announcement, the low was 4602.25 and went down to 4602, before staging a dramatic rebound.

Until the after-hours buying frenzy, the exact high for the day matched Friday’s all-time closing high at 4703.50. For the session, the index added 72.50 handles to close at 4700.50. 

The top component was Nvidia Corp (NASDAQ: NVDA). For the session, it added $21.22 or 7.5% to close at $304.59.

That was over four times the cash index’s gain of 1.63%.

The lack of a more “hawkish” tone from the Fed, caused JP Morgan & Chase Co. (NYSE: JPM) to be the biggest loser of the top components of the index. For the day, the issue declined by $1.19 or 0.75% to close at $157.94.


Wednesday’s With Wedbush: Jay McCanless, Equity Analyst For The Homebuilder Sector

McCannless discussed the factors contributing to a strong 2021 and outlined the catalyst for more to come in 2022. Read more about the discussion here.