Afternoon gains were powered by Amgen's ( AMGN) earnings and hopes for positive tech surprises, as delivered after the close by eBay ( EBAY), whose shares were recently up 12.7% in after-hours trading. Tech aficionados now turn their attention (and hopes) to results after the bell Thursday from Google ( GOOG) and Microsoft ( MSFT).
There may have been some relief that Greenspan didn't sound even more hawkish than he did. After all, he didn't stray too far from his previous stance. But judging by all the recent commentaries, many market players had still nourished secret hopes that the Fed would soon stop raising interest rates, or at least pause, sometimes soon. Those expectations, leftovers from the slowdown in economic activity -- the so-called soft-patch -- seen during the spring, still have not gone away completely. "The market is still assuming that the Fed is going to be more gentle and is going to cease raising rates sooner than is likely," says Tom McManus, market strategist at Bank of America. Those misplaced expectations have kept the strategist more cautious on equities this year. He reduced the equities weighting in his model portfolio to 55% from 60% back in June, then saying that investors were anticipating strong stock performance on the belief that the Fed was close to wrapping up its rate-hikes campaign. He kept traditional bonds out of his portfolio, preferring Treasury Inflation Protected Securities (TIPS). But the market has continued to power ahead since June 6, the date McManus lowered his recommended equity allocation. Since that date, the Nasdaq has gained 5.4%, the S&P has gained 3%, and the Dow has added 2.1%. Bond prices continued to rise throughout June, although they have started to come down since the last Fed meeting on June 30.