US stocks slip after the Fed maintains its support of the economy

FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell speaks to reporters after the Federal Reserve cut interest rates in an emergency move designed to shield the world's largest economy from the impact of the coronavirus, during a news conference in Washington, U.S., March 3, 2020. REUTERS/Kevin Lamarque
  • US stocks were lower Wednesday after the Federal Reserve maintained its support for the economy.
  • Policymakers held the Fed’s benchmark interest rate near zero and maintained the pace of asset purchases of at least $120 billion per month.
  • Google’s parent Alphabet hit a record intraday high after the tech stalwart crushed earnings.
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US stocks closed lower on Wednesday after the Federal Reserve maintained its support for the economy.

The Federal Open Market Committee concluded its two-day April meeting, announcing it would maintain its ultra-accommodative policy stance. The US central bank held the benchmark interest rate near zero and maintained the pace of asset purchases of at least $120 billion per month.

Chairman Jerome Powell also said that widespread vaccination and “strong policy support” have fueled a considerable pick-up in the pace of economic recovery.

“This new-found patience from the market, even in the face of resoundingly strong economic data and rising inflationary pressures is perhaps testament to the Fed’s credibility and the success of Powell’s communication,” said Seema Shah, Principal Global Investors chief strategist. “Investors appear to have accepted – for now, at least – that it is too soon for the Fed to consider tapering and a more persistent overshooting of the 2% inflation target is required before the central bank will even entertain discussion of rate hikes.

She added however, that at some point over the coming months as inflation picks up, the Fed will need to provide “incremental signals” on when the policy unwind will begin.

Here’s where US indexes stood at the 4 p.m. ET close on Wednesday:

Google’s Alphabet Inc. hit a record intraday high after the company posted earnings that beat Wall Street expectations and showed a surge in ad sales. Meanwhile, Microsoft fell to a three-week low after its earnings disappointed. After the closing bell today, Facebook and Apple report earnings. Find a full calendar of this week’s earnings here.

The US Securities and Exchange Commission is considering new guidance to curb growth projections made by listed SPAC, according to Reuters. The reported crackdown comes as the blank-check frenzy that started 2021 cools off. Analysts from JPMorgan today said that the SPAC boom has peaked, and the decline in SPACs since February has been driven by a slowing of retail money flow into stocks.

Ether hit a new all-time high today of $2,740.17, per CoinDesk data. While ether remains far behind bitcoin’s $1 trillion market value, some experts predict that it may not be long before the runner-up dethrones bitcoin as the world’s biggest cryptocurrency.

West Texas Intermediate crude was up 1.6%, to $63.92 per barrel. Brent crude, oil’s international benchmark, rose 1.3%, to $67.29 per barrel.

Gold climbed as much as 0.1%, to $1,780.40 per ounce.

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US stocks trade mixed as investors mull a wave of corporate earnings and the Fed’s upcoming decision

microsoft
Microsoft reported third quarter earnings that were better than financial analysts expected.

  • US stocks were mixed at the open as investors mulled over a wave of corporate earnings and awaited the FOMC meeting today.
  • The Fed is expected to hold its benchmark interest rate near zero and maintain its pace of asset purchases.
  • Microsoft and Google’s parent Alphabet beat earnings expectations.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US stocks were mixed on Wednesday as investors digested an onslaught of corporate earnings and awaited the upcoming monetary policy decision from the Federal Reserve.

Google’s parent Alphabet jumped 5.1% in premarket trading after beating earnings expectations and receiving a number of price target upgrades from Wall Street analysts. Microsoft beat earnings per share and revenue expectations, though its stock slipped in the premarket hours.

The Federal Open Market Committee is expected to hold its benchmark interest rate near zero and maintain its pace of asset purchases when it completes its two-day policy meeting. The FOMC will release a statement at 2:00 p.m. ET today with Chairman Powell following up with a press conference at 2:30 p.m ET.

Economists from Jefferies don’t expect there to be many changes from the previous meeting’s statement.

“We expect that the policy statement will reflect the Committee’s acknowledgement that the economy is on a better track and that much progress has been made since the last meeting,” said chief financial economist Aneta Markowska and economist Thomas Simmons. “However, while we don’t know the definition of ‘substantial’ for sure, we do not think that progress will qualify such that it meets the Fed’s threshold to begin the tapering of Fed asset purchases.”

Markowska and Simmons also expect Powell to emphasize the gap between the current state of the labor market and where it was pre-COVID, while emphasizing the Fed’s patience in its approach to raising rates.

Here’s where US indexes stood at the 9:30 a.m. ET open on Wednesday:

After the closing bell today, Facebook and Apple report earnings. Find a full calendar of this week’s earnings here.

Also on the radar is Joe Biden’s first address as president to a joint session of Congress at 9 p.m. ET. The president is expected to push for major spending and tax hikes as part of his American Families Plan.

US bond yields rose on Tuesday night and Wednesday morning, with the yield on the key 10-year US Treasury note climbing to a near 2-week high of 1.645%.

West Texas Intermediate crude rose 1.2%, to $63.62 per barrel. Brent crude, oil’s international benchmark, was up 1%, to $67.06 per barrel, at intraday lows.

Gold climbed as much as 0.5%, to $1,769.80 per ounce.

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Dow jumps 227 points as strong economic data outweighs Biden tax-hike worry

trader Gregory Rowe
NYSE trader Gregory Rowe works on the floor of the New York Stock Exchange at the end of the trading day.

US stocks closed higher on the last trading day of the week as strong economic data outweighed investors’ fears of the capital gains tax hike proposed by President Joe Biden that would nearly double the tax rate for wealthy Americans.

All three major stock indexes rose Friday propelled by the two popular gauges of business activity that swung even higher in preliminary April readings, according to analytics firm IHS Markit.

The services activity index leaped to 63.1 from 60.4 – the fastest expansion since data collection began in 2009. The firm’s manufacturing index rose to 60.6 from 59.1, which is also a record. Markit’s composite index soared to an all-time high of 62.2 from 59.7. Readings above 50 indicate sector growth, while those below 50 signal contraction.

Ryan Detrick, chief market strategist at LPL Financial, said he was surprised by the market’s reaction to Biden’s proposal. He said investors should have expected it when Biden won.

“Calmer heads are prevailing today with the broad rally at least,” he said in a note. “On the surface, you’d think higher taxes wouldn’t be a good thing, but that’s actually not reality. In fact, the past two times we had an increase in the capital gains tax stocks did really well for the next six months in 1987 and 2013.”

Friday’s gains are a sharp rebound from Thursday’s drop when the markets were spooked after the capital gains tax hike was announced.

“The knee-jerk reaction to yesterday’s news that the Biden administration was interested in almost doubling the capital gains rate was a small selloff in the market,” Chris Zaccarelli, CIO at Independent Advisor Alliance, said in a note. “If the tax increase was actually implemented – as compared to just proposed – the selloff would have been greater.”

Zaccarelli added that the monetary and fiscal stimulus in the system should outweigh concerns over tax policy. But he also acknowledged that the market is relatively expensive by most metrics at this point, which leaves it susceptible to pullbacks, especially when unexpected news arrives.

However, analysts at Goldman Sachs said that congress is likely to settle on a much more modest increase in capital gains tax than Biden would like with the eventual figure likely to land at around 28%.

In bond markets, the 10-year Treasury note rose 1.561% from 1.554% the day prior.

“Since the end of March, we’ve seen a retrenchment of that move as the stock and bond markets have unwound some of those moves,” Zaccarelli said.

Here’s where US indexes stood at the 4:00 p.m. ET open on Friday:

Inovio Pharmaceuticals shares slipped 26% after the US government said it will discontinue funding for a late-phase trial of the company’s COVID-19 vaccine candidate.

In cryptocurrencies, bitcoin slid below $50,000 with $260 billion wiped off the crypto market as Biden’s tax proposals crushed risk appetite. Bitcoin’s weakening momentum has helped contribute to a swift 24% decline from its record high of nearly $65,000 over the past week.

“It is clear that bitcoin is more sensitive to capital gains tax threats than most asset classes,” Jeffrey Halley, a senior market analyst at OANDA, said.

“Black Swan” author Nassim Taleb also doubled down on his view that bitcoin is a Ponzi scheme and a failed currency in a CNBC interview on Friday.

“There’s no connection between inflation and bitcoin,” Taleb told CNBC, adding that everyone knows bitcoin is “a Ponzi.”

Oil prices were steady Friday as Covid-19 concerns, especially in India, rose to new highs. West Texas Intermediate crude rose 1.22% to $62.18 per barrel. Brent crude, oil’s international benchmark, was also up by 1.13% to $66.14 per barrel.

Gold slipped by 0.97% to $1,776.51 per ounce on strong economic data.

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US stocks trade mixed as investors mull proposed capital gains take hike

GettyImages 1207642155
Markets are increasingly concerned that inflation could whack stocks

US stocks were mixed on Friday after falling the day prior on fears of the capital gains tax hike proposed by president Joe Biden that would nearly double the capital gains ta for wealthy Americans.

Investors are now analyzing the implications of the proposed higher taxes and what will this mean for the financial system. David Bahnsen, chief investment officer, The Bahnsen Group, a wealth management firm, said Biden’s plan will have a negative impact on the stock market, though it is as yet unclear how big an impact it will have.

“If the stock market really started to believe that the capital gains tax would double in 2022, it’s entirely possible that there would be an acceleration of selling towards the end of this year and into early 2022,” he told Insider.

Bahnsen added that raising capital gains taxes is a disincentive for investors to sell their stocks at the appropriate time.

“Not selling an asset that should be sold due to fear of taxes is distortive to markets,” he added.

But congress is likely to settle on a much more modest increase in capital gains tax than Biden would like with the eventual figure likely to land at around 28%, analysts at Goldman Sachs said in a note Friday.

Here’s where US indexes stood at the 9:30 a.m. ET open on Friday:

Skillz jumped as much as 8% on Friday after Cathie Wood’s ARK Innovation ETF added another 1,222,207 shares of the mobile gaming platform to its holdings the day before.

In cryptocurrencies, bitcoin slid below $50,000 with $260 billion wiped off the crypto market as Biden’s tax proposals crushed risk appetite. Others digital assets tumbled as well. Ether fell 7% to around $2,220, dogecoin fell 17% to $0.17, and XRP dropped 8%.

“It is clear that bitcoin is more sensitive to capital gains tax threats than most asset classes,” Jeffrey Halley, a senior market analyst at OANDA, said.

Oil prices held steady Friday as Covid-19 concerns, especially in India, rose to new highs. West Texas Intermediate crude slipped 0.13% to $61.35 per barrel. Brent crude, oil’s international benchmark, was also lower 0.26% to $65.25 per barrel.

Gold climbed slightly by 0.5% to $1,797.52 per ounce thanks to lower US Treasury yields as well as a weaker dollar. The precious metal is on track for its third weekly gain.

 
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Dow, S&P 500 close at records amid strong global economic data

Trader NYSE

The Dow Jones industrial average and S&P 500 closed at record highs on Friday as investors remain optimistic about the global recovery amid strong economic data.

China said its economy grew 18% in the first quarter of 2021, with the nation saw retail sales soar 34.2% in March. In the US, housing starts surged 19.4% to a a 15-year high on Friday after jobless claims tumbled to a pandemic-era low the prior day.

Here’s where US indexes stood at the 4 p.m. ET close on Friday:

Read more: Bank of America shares 6 ETFs to capitalize on what could be the greatest capital-spending boom in 4 decades as Biden’s infrastructure policy rolls out

Morgan Stanley concluded a blockbuster week for bank earnings, beating estimates in every major category – although the strong report was overshadowed by a $911 million loss linked to the Archegos Capital implosion.

Across Wall Street, Citigroup posted record profit, Goldman Sachs beat revenue and profit expectations on strong trading and investment-banking revenue, and JPMorgan and Wells Fargo turning in profit that surpassed Wall Street’s targets.

In a different realm of markets, Dogecoin went on a record-shattering rally this week. Elon Musk’s favorite meme-token spiked more than 100% on Friday to record highs.

West Texas Intermediate crude fell as much as 1%, to $62.83 per barrel. Brent crude, oil’s international benchmark, slid 0.8%, to $66.44 per barrel, at intraday lows.

Gold climbed as much as 1.1%, to $1,783.85 per ounce.

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Stocks slip from records as optimism over economic recovery pauses

Traders work on the floor of the New York Stock Exchange (NYSE) on November 20, 2019 in New York City
Traders work on the floor of the New York Stock Exchange (NYSE) on November 20, 2019 in New York City

All three major US indexes ended lower to start the week as investors take a breather from the economic recovery-fueled optimism that sent stocks to record highs on Friday.

Wall Street is now awaiting earnings later this week and key inflation data that’s due Tuesday. Economists polled by Reuters expect the consumer price inflation index to jump 2.5% from 1.7% year on year in February. But there’s a risk that the Fed and economists are unprepared for the magnitude of economic growth and inflation, according to Bank of America.

Semiconductor stocks swerved Monday,with Intel and AMD each falling about 4% after Nvidia announced plans to manufacture its own CPU processor. The news sent shares of Nvidia surging by as much as 4%.

Here’s where US indexes stood at the 4:00 p.m. ET close on Monday:

Canaccord Genuity upgraded Tesla to a “buy” rating on Monday, with analyst Jed Dorsheimer explaining that Tesla’s budding energy storage business has long-term potential. Tesla jumped as high as 3.9%.

Veteran investor Danny Moses compared the stock-market boom to the dot-com bubble, underscored the dangers of excessive leverage and liquidity, and called for the Federal Reserve to temper its stimulus efforts in a recent interview. Here are his 16 best quotes.

Bitcoin rose as much as 2.6% to $61,229 as the crypto world prepares for Coinbase’s direct listing on Wednesday. The surge took the coin close to its all-time high of $61,742 reached on March 1.

West Texas Intermediate crude climbed 0.7%, to $59.71 per barrel. Brent crude, oil’s international benchmark, rose 0.5% to $63.30 a barrel.

Gold slipped 0.8%, to $1,731.70 per ounce.

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US stocks retreat from records as investors mull economic-recovery progress and new Powell comments

FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell arrives to speak to reportersin Washington, U.S., March 3, 2020. REUTERS/Kevin Lamarque

US stocks slipped from record highs as investors digest Federal Reserve Chairman Jerome Powell’s recent comments and prepare for a busy week ahead for economic data and earnings.

In an interview with CBS, which aired on Sunday, Powell said that the US is at an “inflection point” and is likely to see a boom in growth and hiring, but still faces threats from COVID-19.

“The outlook has brightened substantially,” he told CBS’s “60 minutes.” Yet he said there was a risk that coronavirus starts spreading again.

He also discussed the outlook for a digital dollar, and said the the US central bank is working hard on researching one as nervousness grows in some quarters about China’s rapid development of its own digital currency.

As the economy continues to recover from the pandemic, investors are focused in on inflation data that is due Tuesday. Economists polled by Reuters expect the consumer price inflation index to jump 2.5% from 1.7% year on year in February.

On the earnings front, Wall Street behemoths Goldman Sachs, JPMorgan, and Wells Fargo are due to report on Wednesday.

Here’s where US indexes stood at the 9:30 a.m. ET open on Monday:

Bitcoin rose as much as 2.6% to $61,229 as the crypto world prepares for Coinbase’s direct listing on Wednesday. The surge took the coin close to its all-time high of $61,742 reached on March 1.

West Texas Intermediate crude climbed 1.7%, to $60.31 per barrel. Brent crude, oil’s international benchmark, rose 1.6% to $63.97 a barrel.

Gold slipped 0.5%, to $1,737 per ounce.

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US stocks trade lower as markets await details on massive infrastructure plan

Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange (NYSE) from Getty Images

US stocks closed lower on Tuesday as investors awaited details onBiden’s planned infrastructure spending package. The Washington Post reports that the first part of President Joe Biden’s infrastructure package will come in at $2.25 trillion, and contain funding for initiatives including broadband, highways, and housing. Biden will announce details on the first part of the package on Wednesday.

The 10-year Treasury yield surpassed 1.7% on Tuesday, hitting a new 14-month high as investors price in expectations of higher inflation and a stronger US economy amid Biden’s new multi-trillion spending plan and the COVID-19 vaccine rollout.

The US Consumer Confidence index soared to 109.7 in March from 90.4, far above the consensus, 96.0. It’s the largest one month gain since 2003, according to Pantheon’s Ian Shephardson.

“The index is still short of its pre-Covid trend, about 130, but it is no longer massively adrift. A combination of the latest stimulus payments and the much better Covid picture likely explains the surge in confidence,” said the chief economist.

Here’s where US indexes stood after the 4:00 p.m. ET close on Tuesday:

Wells Fargo jumped as much as 4% on Tuesday after it said it suffered no losses related to its exposure to Billy Hwang’s Archegos Capital. Though Japanese firm Nomura Holdings said it could suffer a possible loss of around $2 billion, while Credit Suisse Group, which has declined to provide a numerical impact, could see around $3 billion-$4 billion in the fallout, according to reports. JPMorgan estimated today that banks could face up to $10 billion in losses stemming from the liquidation of Archegos.

Gold prices dropped below $1,700 for the first time in three weeks, under pressure as long-dated Treasury yields and the US dollar rose on expectations that President Joe Biden’s infrastructure plan will cost multiple trillions of dollars.

The precious metal dropped 1.8% to $1,683.50 per ounce.

West Texas Intermediate crude fell by 1.97%, to $60.34 per barrel. Brent crude, oil’s international benchmark, was down 1.66% to $63.90 per barrel.

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US stocks dip as yields rise on Biden’s spending plan and pace of economic recovery

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US stocks were slightly lower at the open on Tuesday and bond yields rose as investors awaited President Joe Biden’s spending plan and continued to assess the fallout from the Archegos Capital Management implosion.

The 10-year Treasury yield continued its march higher, rising by 5 basis points, to 1.77%, its highest in 14 months, since the start of the pandemic just over a year ago.

“We believe the recent rise in nominal government bond yields, led by real yields, is justified and reflects markets awakening to positive developments on the faster-than-expected activity restart combined with historically large fiscal stimulus – all helped by a ramp-up in vaccinations in the U.S.,” a team of strategists from the BlackRock Investment Institute said.

Biden is expected to deliver a speech on infrastructure spending on Wednesday. The plan could include as much as $4 trillion in new outgoings and more than $3 trillion in tax hikes, sources told The Washington Post.

Here’s where US indexes stood after the 9:30 a.m. ET open on Tuesday:

Bitcoin rose above $59,000 as PayPal announced it would allow US consumers to use their cryptocurrency holdings to pay at millions of its online merchants. Bitcoin has added nearly $8,000 to its price in the past week.

West Texas Intermediate crude fell by 1.6%, to $60.55 per barrel. Brent crude, oil’s international benchmark, was down 1.35% to $64.11 per barrel.

Gold dropped 1.5%, to $1,687.40 per ounce.

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Tech stocks lead rebound as investors show renewed optimism around economic recovery

Pimco at NYSE in 2018
Pimco at NYSE in 2018


US stocks rallied at the open on Wednesday after a sharp sell-off the previous day as traders expressed renewed optimism about the economic recovery. The tech-heavy Nasdaq led the charge, with investors piling into rate-sensitive technology stocks as bond yields stabilized.

Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen are set to appear before the Senate at 10 a.m. for the second day of hearings. On Tuesday, Powell said that the US economic recovery had progressed faster than expected but was far from complete and that the Fed would provide support for as long as it takes to fully recover.

Oil prices bounced after their recent slide. A major ship blockage in the Suez Canal could delay supply.

Here’s where US indexes stood after the 9:30 a.m. ET open on Wednesday:

Bitcoin rose by 5%, to above $57,000, after Elon Musk said people could now buy Tesla cars with the world’s most popular cryptocurrency.

West Texas Intermediate crude rose by 3.4%, to $59.70 per barrel. Brent crude, oil’s international benchmark, gained 3%, to $62.67 per barrel.

Gold jumped 0.4%, to $1,731.60 per ounce.

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