Photograph by Saul Loeb / AFP / Getty Images
After three days of record highs, investor enthusiasm eased a little on Wednesday. Blame the Federal Reserve. As the gains advanced, the Fed interrupted the party, with a new statement after its two-day meeting and a press conference hosted by Fed Chairman Jerome Powell. The statement and the press conference told a bit about a different story, and that divergence is clear in the day's action chart.
The shares reached their highs of the day shortly after the Fed statement was published at 2 p.m. In that text, the Fed called inflation, or lack of it. The key line was: "On a 12-month basis, headline inflation and inflation for items that are not food and energy have declined and are below 2 percent."
The decline in language was new and seemed to stimulate the hope that a rate cut could actually be close. However, President Powell quickly broke those dreams. During his subsequent press conference, Powell said:
We suspect that some transitory factors may be at work. Therefore, our basic vision remains that, with a strong labor market and continuous growth, inflation will return to 2 percent over time and then be more or less symmetric around our long-term goal.
Stocks fell to close, with the S & P 500 ending the day with a 0.75% decline.
This is an excerpt from what economist Joel Naroff of Naroff Economic Advisors sent around Wednesday afternoon:
The markets were surprised by the Fed's poor communication about its opinion on inflation. First they reacted as if the rates went down and then they rejected everything and even something else.
Investors have already readjusted the likelihood of a rate cut at the next Fed meeting in June. Last week, investors were pricing in a 25% chance of a quarter-point cut. Tonight that probability has dropped to 7%, and stock investors are again in a sales mood.
The market at a glance
Dow Jones Industrial Average
: -0.61% to 26,430.14
S & P 500
: -0.75% to 2,923.73
: -0.57% to 8,049.64
The hot action:
Royal Caribbean Cruises
The big loser:
Molson Coors Brewing
Best sector: Real Estate + 0.0%
Worst sector: Energy -2.0%
Our obsession with Tesla
The latest controversy surrounding
Chief Executive Elon Musk, who has agreed with the SEC on his Twitter habit, seems to be over. For now. On Tuesday, a US district judge UU Approved new settlement terms that give Musk a list of things he can not tweet.
But if someone expected Musk to actually withdraw from Twitter, that has not happened. Since the SEC's Twitter rules were first published in a court file last Friday, Musk has tweeted 47 times. On Monday night, he responded "excellent badysis" to a blogger who wrote a publication called "Day of Autonomy of Tesla, Stock, Short Sellers and more." The publication includes this line on short sales:
Tesla shares are currently one of the shortest stock in the stock market. More than 32 million Tesla shares (around $ 8,000 million) are sold, for which the seller does not own the shares. If you think that this seems like a kind of crazy madness that someday we will see again and we will ask ourselves if this was legal, you will be right. Short sellers have all the incentives to spread fear, uncertainty and doubt (known as FUD) about an action in the hope that the stock will fall, ideally at $ 0, where they can buy their short stock for a fraction of what they sold.
The musk is not changing in the short term.
This week, for the last episode of our Readback podcast, I spoke with my colleague David Marino-Nachison about the endless concern for Musk and Tesla. Consumers, and readers, remain obsessed with Tesla, and journalists are not afraid to provide a regular solution. We estimate that David probably spends approximately one third of his time covering Tesla these days.
In the podcast, David sums up very well the three things that fuel Tesla's obsession: 1) the musk at the head; 2) a company that took the novelty of electric cars and turned them into a status symbol that impresses the critics of cars, consumers and technology experts alike; and 3) the ever-present possibility that Tesla can not survive yet.
David and I talked about the three topics. Check out the episode here.
What we are reading
Apple's stock is up after its earnings. This is what Wall Street thinks. From Barron
The opposition can grow to the agreement of Anadarko de Occidental due to the harsh terms of Berkshire The de Barron
AMD boss Lisa Su talks about new chips, cloud games and M & A Barron
The CEO of Royal Caribbean, Richard Fain, on profits, consumer confidence and the future of the company Barron
For workers with lower wages, the robots' masters have reached the Wall Street Journal
Thursday's earnings schedule includes reports from Activision Blizzard, CBS,
A version of this article appeared for the first time in Review & Preview, a daily email from Barron & # 39; s. Register here and every night we will review the news that moved to the markets during the day and we will see what it means for your portfolio in the morning.
Write to Alex Eule at [email protected]