The U.S. Federal Reserve turned the table on investors, making big winners out of some nimble buyers and losers out of those who had expected policymakers to follow through on hints of a cut in their support for markets.
The central bank elected to hold off on reducing its massive $85 billion-per-month stimulus on Wednesday, citing concerns that financial conditions would restrain growth.
U.S. stocks hit a new record, gold and gold stocks soared, and the bond market rallied, while the dollar sunk and indexes measuring volatility slumped. Here's a quick look at some of the big winners and losers out of Wednesday's action:
--Anyone who doubled down on gold or gold miners. The biggest mover among exchange-traded funds was the Direxion Daily Gold Miners Bull 3x fund, which tries to triple the daily move in the NYSE Arca GoldMiners Index. Gold had a huge day, gaining 4.2 percent, and the Arca Goldminers Index rose 9.2 percent. Well, the "Nugget" ETF went nuts, rising 27.5 percent on more than 9.6 million shares traded in the most active day of trading in its history. Meanwhile, the Market Vectors Gold Miners ETF rose 8.9 percent, the most active U.S. ETF outside of the S&P 500 tracking fund.
--Homebuilders. The sharp decline in U.S. Treasury securities translated to a big move for building stocks, particularly as housing-market data in the last couple of months has been on the soft side. Big movers included D.R. Horton Inc, up 6.9 percent, and KB Home, which rose 8.2 percent. The PHLX Housing Index gained 4.2 percent.
--The euro. Speculators - largely hedge funds - called this one right, shifting from a net short position of about $6.5 billion in the euro in early July to about $2.1 billion in the most recent week, according to CFTC data. That's not as extended as a few weeks ago, but still shows that the view of the U.S. being ahead of the rest of the world wasn't a universal one.
--William Shatner. The S&P 500, in its long history, has never had a stock hit $1,000 a share (no, not Berkshire Hathaway). But travel discounter Priceline.com, which features longtime actor Shatner in its commercials, saw its shares bust into four digits on Wednesday. It didn't close there, falling to $995.09, but it will probably be only a matter of time.
--Bond investors who took the Fed at its word. Speculators had amassed a short position of about 85,000 contracts on 10-year Treasury futures in advance of the Fed meeting as of last week. That's down from the previous two weeks, when short positions ballooned to more than 100,000 contracts, but it was still a big change from the market's steady bullish stance that endured since May 2012. "FOMC smoked us. Mea culpa," wrote Mary Beth Fisher, head of U.S. interest rate strategy at Societe Generale's corporate and investment banking unit in New York. "For all of Bernanke's rationalizing, 'yeah but we never said we were really, REALLY going to taper' nonsense, there is no denying that the decision to hold off another meeting or two represents a massive shift to the dovish."
--Investors looking for a freakout. Those expecting violent market reactions have had a lot to be disappointed about of late, and this decision was no exception. It wasn't for lack of trying, though: According to Schaeffer's Investment Research, the two-week period through Monday saw 3.51 calls - bets on increased volatility - purchased for every one put option. That's higher than 85 percent of the readings over the past year, according to Schaeffer's. Well, the CBOE Volatility Index lost 6.5 percent to close at 13.59 on Wednesday. Among the most popular contracts of late has been the $20 strike calls expiring in mid-October, with nearly 240,000 in existing contracts. Those options fell 20 cents to 35 cents each, a 36 percent drop as traders exited volatility bets. The one saving grace? October options expire on October 16, so there's still time.
--The dollar. The greenback fell by its most in three months against a basket of currencies and effectively erased most of its gains in a year in a matter of hours, sitting at levels not seen since February. It had a notably terrible performance against the pound, which had its best day against the U.S. currency since October 15, 2009. Investors were particularly lined up against sterling as of last week, with a net short position of $3.7 billion, according to CFTC data.
--Anybody who locked in a mortgage in the last two weeks. The MBA 30-year mortgage rate rose as high as 4.8 percent earlier in September and was last at 4.75 percent. By comparison, a 30-year U.S. Fannie Mae benchmark mortgage bond has seen its yield fall to 3.35 percent from 4 percent right around when mortgage rates topped out. The sharp fall augurs for another drop in borrowing costs for long-term housing loans.
(Reporting by David Gaffen)