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SPY Soared High through All of the Component Sectors

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Dec. 16 2015, Updated 12:43 p.m. ET

SPY rose by 1.1%

The SPDR S&P 500 ETF (SPY) and the Direxion Daily S&P500 Bull 3X ETF (SPXL) rose by 1.1% and 3%, respectively, on Tuesday, December 15, 2015. The stock market geared up for the Fed’s decision on the interest rate hike. Despite the fact that the ultra-low interest rate policies have always favored the stock markets, US investors went for the equities on the day. The rising likelihood of an interest rate hike along with the rally in SPY for the second consecutive day strengthened investors’ confidence in the US economy.

The above graph shows the percentage changes in the performances of SPY’s component sectors on December 15 as the world waits for the outcome of the FOMC’s (Federal Open Market Committee) meeting on Wednesday, December 16, 2015.

All 11 of SPY’s component sectors rose on Tuesday, December 15.

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Financial services and financial sectors rose

Many banks and financial services providers’ stock rose on Tuesday, December 15. Investors anticipate that the Fed’s meeting will conclude with a rate hike. The increased borrowing costs due to a rate hike will help these banks and financial services providers obtain higher profit margins. The expectation of a higher profit margin made financial stocks very attractive. Therefore, stocks of Affiliated Managers Group (AMG), Leucadia National (LUK), Regions Financial (RF), and Comerica (CMA) rose by 5.7%, 5.5%, 4.4%, and 4.3%, respectively, on the day.

Energy sector

Oil prices rose for the second consecutive day. This boosted the energy sector. The Energy Select Sector SPDR ETF (XLE) rose by 2.5% on December 15. US crude oil prices rose by 2.9% to reach $37.35 per barrel. Brent crude rose by 1.4% to settle at $38.45 per barrel in London. The stocks of Transocean (RIG), QEP Resources (QEP), Helmerich & Payne (HP), and Nabors Industries (NBR) rose by 5.9%, 6.1%, 5.4%, and 5.0%, respectively, on the day.

In the next part of this series, we’ll analyze the moving averages of the financial services sector.

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