Fed's Nuanced Statement No Help To Market

The market rallied modestly after the Fed announcement, then came back down. Why? While the Fed statement was nuanced, and clearly indicated the Fed was increasingly concerned about inflation, it was perhaps too nuanced for bulls. The dollar deteriorated, and oil moved higher.

Stock bulls want the Fed to protect the dollar, which will push oil lower and will help the airlines and the autos and the FedEx'sof the world.

Aerospace was notably weaker. Boeing had a Sell rating slapped on it from Goldman Sachs. While the downgrade is due partly to the general observation of "continued weakness in the economy, continued high fuel prices, and our view that Aerospace stocks underperform when both occur simultaneously," they also went on to take a specific shot at Boeing's critical 787 business: "we believe there is more risk to the 787 program than is currently priced in as the program has yet to even enter flight test, where historically most issues on development aircraft are found."

Boeing closed at a two-year low, and other stocks that had aerospace exposure, like United Technologiesand Rockwell Collins, and those in the aerospace supply chain like BE Aerospace, Honeywell,Triumph Group and Precision Castparts, were all weaker.

Elsewhere, financials could not maintain even a modest two-day rally; most came down late in the day and ended on either side of fractionally positive or negative.

The hope for a summer rally is predicated on a notable crack in oil (a sustained drop below $120 or so). After that, the notably oversold conditions (which could last a long time), and the lopsided bearishness of the Street should enable some kind of short-term bounce, bulls hope.

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