Helicopter Jon to the Rescue as S&P 500 Gains Most in Four Weeks

It’s a bird! It’s a plane! It’s Jon Hilsenrath, doing his best Superman impersonation to lift the stock market on his back before the Fed announcement tomorrow.

Associated Press

The S&P 500 rose 0.8% to 1,998.98, its biggest gain in four weeks, while the Dow Jones Industrial Average gained 0.6% to 17,131.97. The Nasdaq Composite advanced 0.7% to 4,552.76 and the small-company Russell 2000 finished up 0.4% at 1,150.97.

Sure, there was economic data today–producer prices didn’t budge in August, a sign that inflation might not be a worry after all–but the market did little today until a video of the Wall Street Journal’s Jon Hilsenrath, who is often thought to be a mouthpiece for the Fed, hit the web. The resulting bounce caused the Lindsey Group’s Peter Boockvar to dub today’s move”Jon Hilsenrath” rally:

This is a Jon Hilsenrath stock market rally. In a webcast done on WSJ.com, Jon Hilsenrath (just a reporter but one who speaks to many Fed officials) is making the argument that since the economic data hasn't changed much since the July meeting, the Fed will likely keep "significant underutilization" of labor market resources comment in the statement. On the "considerable time" wording, he thinks it stays in the statement but will be qualified as the Fed doesn't want to send any signals on WHEN rates may go up. As I said this morning, a potential "considerable time" change in the wording is just semantics and focus more on whether "significant utilization" stays in or not.

Birinyi’s Rob Leiphart considers the possible changes and what their impact could be:

The last time rates were adjusted was on December 16, 2008, however QE was tapered by $10 bil-lion at the last six meetings. Of the 101 economists surveyed by Bloomberg only one is expecting a change in rates (+0.25%).

The focus tomorrow be on the language surrounding the first rate increase and the completing of the quantitative easing (QE), which should be complete as of the next policy meeting in October.

With the focus surrounding the first rate increase, we put together the table to the right. We have provided, back to 1963, the performance of the S&P 500 three and six months before and after the first rate increase.

And here’s the chart. Let’s just hope we’re nowhere near needing it.