Markets Finally Leave Taper-Phobia Behind

On Tuesday, the stock market finally returned to where it was before Ben Bernanke disclosed the Fed’s timetable for ending quantitative easing.

On Tuesday, the stock market finally recovered from its post-FOMC slump. On June 18, the day before Ben Bernanke’s post-FOMC meeting press conference, wherein he announced the tentative timetable for the Fed’s phase-out of quantitative easing, the S&P 500 (NYSEARCA:SPY) closed at 1,651. Since that event, the S&P 500 did not close above that level until Tuesday, when it finished the session at 1,652. The Dow Jones Industrial Average (NYSEARCA:DIA) finished Tuesday’s session just 18 points below its June 18 closing level of 15,318, making that the number to watch when the bell rings at 4:00 on Wednesday.

Despite the fact that the ten-year Treasury yield still remains just above 2.6 percent, three of the four biggest gainers on the S&P 500 at Tuesday’s closing bell were homebuilder stocks. DR Horton (NYSEARCA:DHI) jumped 7.55 percent; Lennar (NYSEARCA:LEN) soared 5.93 percent, and PulteGroup (NYSEARCA:PHM) jumped 5.48 percent. Concern about rising mortgage rates has plagued homebuilder stocks since Dr. Bernanke announced the phase-out of quantitative easing on June 19. The SPDR S&P Homebuilders ETF (NYSEARCA:XHB) closed above $30 per share on Tuesday for the first time since June 18, skyrocketing 2.77 percent to close at $30.03.

The Dow gained 75 points to finish Tuesday’s trading session at 15,300 for a 0.50 percent advance. The S&P 500 climbed 0.72 percent to close at 1,652. The Nasdaq 100 (NASDAQ:QQQ) advanced 0.61 percent to finish at 2,984. The Russell 2000 (NYSEARCA:IWM) surged 0.87 percent to end the day at a new record-high closing level of 1,018.05. In other major markets, oil (NYSEARCA:USO) jumped 0.96 percent to close at $36.76.

On London’s ICE Futures Europe Exchange, September futures for Brent crude oil advanced by 36 cents (0.34 percent) to $107.02/bbl. (NYSEARCA:BNO). August Gold Futures advanced by $12.50 (1.01 percent) to $1,247.40 per ounce (NYSEARCA:GLD). Transports were in hyperdrive on Tuesday, with the Dow Jones Transportation Average (NYSEARCA:IYT) accelerating 2.38 percent.