The following graph illustrates the performances of the component sectors of the SPDR S&P 500 ETF (SPY) on October 28.
All the major component sectors of SPY rebounded on October 28 except for the utility sector, the real estate sector, and the consumer staples sector. The probability of a rate hike in December or early 2016, as hinted in the FOMC statement released on Wednesday, October 28, sent financial sector stocks up, leading SPY that day.
A rate hike implies an increase in borrowing costs, which benefits banks and financial companies. So the Financial Select Sector SPDR ETF (XLF) and the Financial Services Select Sector SPDR ETF (XLFS) jumped 2.3% and 2.6%, respectively, on October 28, and finance stocks led SPY.
Crude oil prices rose on October 28 after the EIA (U.S. Energy Information Administration) released its petroleum status report. According to the report, oil stocks kept rising, with inventory going up by 3.4 million barrels for the week ended October 23.
Gasoline and distillates inventories went down 1.1 million barrels and 3.0 million barrels, respectively. With moderate refinery demand for oil, crude oil rose, leading to a rise in energy sector stocks on October 28.
With markets and investors expecting rates to be unchanged at the recent FOMC meeting, stocks of almost all the major sectors, including the industrial and material sectors, took an upward direction. It’s also anticipated that market participants will welcome a slight hike in the interest rate.
The Fed’s statement suggested that a rate hike is on the table for the December meeting and that action will be based on the strength of the economic indicators. This pointed to the strength of the US economy amid easing of money supplies in other economies of the world. As a result, US stock markets closed with gains on Wednesday, October 28.
Now let’s look at SPY’s key stocks on Wednesday, October 28.