Wells Fargo & Co (WFC), The Home Depot, Inc. (HD): When Will Investors Stop Worrying About QE?

Another area worth following closely is the utilities sector, which could be represented by an ETF like the Utilities Select Spider. I think this ETF will be a very useful gauge of interest rate sentiment and/or whether the economy is going to slow down or not. Utilities do tend to be interest rate sensitive (thanks to their tendency to carry debt and pay high dividend yields),and the sector has sold off sharply in recent weeks as the market anticipated Bernanke’s statement.

^TNX data by YCharts

Again it is worth watching this ETF’s movement in order to see what sentiment is over interest rates.

The bottom line

In conclusion, I think the investing fixation with QE will continue for a while yet, and we can expect the Federal Reserve to carry on doing exactly what it has been doing before. If the economy gets weaker (and you will see it in the stocks discussed above) then the rhetoric will turn back into more liquidity provision but, if the economy continues to do well then, and only then, will the QE fixation abate. However we might be headed for some more volatility as this QE obsession continues.

Lee Samaha has a position in Home Depot. The Motley Fool recommends Home Depot and Wells Fargo. The Motley Fool owns shares of Wells Fargo.

The article When Will Investors Stop Worrying About QE? originally appeared on Fool.com.

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