The Dow sinks 360 points as investors process Fed policy and lack of economic reports


US stocks traded sharply lower at the start of Thursday as investors digested the Federal Reserve’s economic outlook and its decision to keep benchmark interest rates at supercoil levels for at least the next three years.

A round of low-stellar US economic reports, including jobless benefit claims, manufacturing activity and housing, discourage investors.

How are equity benchmarks performing?

Dow Jones Industrial Average DJIA,
-1.24%
27,662, was off 365 points or 1.2% on the S&P 500 Index SPX,
-1.42%
Traded down 51 points at 3,334, a fall of 1.5%. Nasdaq Composite Index Comp,
-1.88%
There were 223 points or 2% retreating to reach 10,831.

On Wednesday, the Dow added 36.78 points or 0.1% to end at 28,032.38, while the S&P 500 index closed up 15.71 points, or 0.5%, at 3,385.49. The Nasdaq Composite Index fell 139.85 points or 1.3%. Russell 2000 Index RUT,
+ 0.92%
Small capitalization companies gained 14.18 points, or 0.9%, to close at 1,552.33.

What is driving the market?

The rise in US economic data amid the coronovirus epidemic and uncertainty about the Fed’s new policy stance in the near future was causing some friction to buy shares on Thursday morning.

A day after the Fed released its most recent policy update and kept its benchmark interest rate in the range of between 0% and 0.25%, some investors believe Jerome Powell, chairman of the US central bank, has raised the challenges. Emphasis may have destabilized the stock market. The American economy has to cope as it tries to emerge from the recession brought on by the coronovirus epidemic.

The Fed said it expected interest rates to remain at zero until at least 2023, but indicated that despite the run-up in equity values ​​this year, the road ahead for the economy could be prolonged, as the US would still make millions. People who are working with are unemployed.

The Fed’s meeting was the first since last month when officials announced a new policy focused on average-inflation targeting, allowing inflation to rise above its former 2% annual target or fall below the interest rate hike. Granted.

“We attribute reversal of risk to lack of strong guidance matching [quantitative easing] Where the committee preferred to maintain flexibility, it also continued to have a very vague formulation on concerns about overselling, financials and some misunderstandings / slight misunderstandings, ”Evercore ISI analysts Krishna Gua and Ernie Tedeski wrote in a research note .

Analysts said analysts viewed the overall tone of the Fed’s Wednesday statement and Powell’s news conference increasingly positive for investors.

“This is evidence that the Fed’s response function has changed. It is a long-lasting bull fuel, said Evercore analysts.

Among other central banks, the Bank of Japan, held its policy steady at the conclusion of its assembly, while the Bank of England on Thursday left interest rates unchanged, as expected, but statements suggested that it had set negative rates. Was discovered

On US fiscal policy, prospects for another coronavirus aid package are confused on Thursday after Trump’s call for more spending by Senate Republicans.

Market participants saw a reading of the health of the labor market, with weekly, initial unemployment benefit claims showing 860,000 Americans filed for unemployment benefits, better than the estimated 870,000, with continuing claims at 12.63 million, but right now Also reflect very high unemployment levels.

Separately, a reading of manufacturing activity in the Philadelphia area, the Philadelphia Fed Manufacturing Index fell to 15.2 in September, falling to 17.2 in the following month, slowing the pace of recovery from the COVID-19 pandemic.

In other US economic reports, US home builders began building homes in August at a seasonally adjusted annual rate of 1.42 million, representing a 5% decrease from the previous month, but up 3% from a year earlier. Was, the US Census Bureau said Thursday.

Meanwhile, the director of the US Centers for Disease Control and Prevention, Robert Redfield, said that a vaccine, which said the vaccine would be in “very limited supply” at the end of the year, and President Trump, who would claim that any immediate one would be ready. Use by the public may, soon, lead to some decline in equity.

Which stocks are in focus?
  • Shares of Quest Diagnostics Inc. DGX,
    -1.55%
    The company said on Thursday that it would sell COVID-19 diagnostic tests directly to consumers for use at home. The test, which requires nasal swab collection, previously received an Emergency Use Authority from the Food and Drug Administration

  • Delta Air Lines Inc.
    lentils,
    -2.48%
    The loan offer with its SkyMills IP Ltd subsidiary was said to be $ 9.0 billion from previous plans to offer $ 6.5 billion on Thursday.

  • Michaels Cos Inc. MIK,

    The arts and crafts retailer plans to offer $ 500 million of 7-year bonds as one of several companies issuing record levels of debt during the coronovirus epidemic.

  • Shares of Tesla Inc.. TSLA,
    -5.03%
    He was put on track on Thursday to increase the pullback he started last season.

  • MetLife Inc.. met,
    -0.53%
    On Thursday announced a deal to buy managed vision care company Versant Health from an investor group including Centerbridge Partners and FFL Partners for $ 1.68 billion.

  • Vitru Limited. VTRU,
    ,
    Thursday revealed that its initial initial public offering is now expected to be between $ 22 and $ 18 per share, up from previous expectations of $ 22 to $ 24 per share.

  • Modern Inc.. mRNA,
    + 0.90%
    CEO Stephen Bansell said in a news release on Thursday that the pharmaceutical company plans to develop a seasonal flu vaccine soon. “We are increasing our investment in vaccines and we will develop a seasonal flu vaccine that needs highly effective vaccines,” said modern stocks Vaccines

How did other markets fare?

TMUBMUSD10Y, yield on 10-year Treasury note
0.660%
The next day of the Fed’s decision fell 2.4 basis points to 0.66%. Bond prices are the opposite of yields.

ICE US Dollar Index DXY,
+ 0.04%,
Which tracks the Greenback’s performance against its major rivals was almost unchanged at 93.214.

Gold futures GCZ20,
-1.31%
Comx fell 1.4% to $ 1,943.30 an ounce. US crude oil benchmark CL.1,
-0.69%
OPEC + is trading 0.7% lower at $ 39.90 per barrel under the monitoring meeting.

Global equity traded lower, with Stoxx Europe 600 index SXXP
-0.92%
0.9% below, and the UK benchmark FTSE 100 UKX,
-0.44%
Below 0.5%. In Asia, Hong Kong’s Hang Seng Index HSI,
-1.55%
1.6% lower and Shanghai Composite SHCOMP, off
-0.41%
0.4% lost. Nikkei NIK of Japan,
-0.66%
Closed down 0.7%.

    .

Leave a Reply