Stocks Climb With Bonds, Dollar Slumps After Fed: Markets Wrap
Bloomberg – U.S. stocks rose with Treasuries as the Federal Reserve signaled its commitment to maintaining crisis-level policies. The dollar fell.
The S&P 500 turned higher and the Nasdaq 100 headed toward a fresh record as the central bank kept rates near zero and said it will at least maintain the current rate of bond purchases while warning that the pandemic still poses considerable risks to the economy.
“The message is ‘the Fed’s on hold, don’t hold your breath for that to change,” says Kathy Jones, chief fixed income strategist for the Schwab Center for Financial Research. “The playbook that people have been using — buy what the Fed buys, you’ve got the Fed behind your back — that’s still the playbook they’re going to follow.”
U.S. equities have rallied more than 40% from their March lows as central-bank asset purchases and unprecedented stimulus sparked demand for risk assets. Chairman Jerome Powell was scheduled to hold a press conference at 2:30 p.m. Washington time. Earlier Wednesday, Treasury Secretary Steve Mnuchin said that the U.S. “definitely” needs additional fiscal stimulus.
Stocks may be the ultimate beneficiary of trillions of dollars in economic stimulus from the Fed, according to Savita Subramanian, Bank of America Corp.’s chief U.S. equity strategist. “Liquidity looking for a home” is bolstering the FANG stocks — Facebook Inc., Amazon.com Inc., Netflix Inc. and Google’s owner, Alphabet Inc. — along with their technology-driven peers, she wrote in a report this week.
The danger, though, is that any complication in the economic recovery could see market gains swiftly reverse — at a time when there’s less room for additional support. The pandemic is splintering the world economy, and policy makers can’t risk a premature withdrawal of lifelines to businesses and the most vulnerable people, the Organisation for Economic Co-operation and Development warned. The top U.S. infectious disease specialist Anthony Fauci called the outbreak his “worst nightmare” and warned that the deadly outbreak is far from over.
These are some of the main moves in markets:
- The S&P 500 rose 0.3% as of 2:23 p.m. New York time.
- The Stoxx Europe 600 Index decreased 0.4%.
- The MSCI Asia Pacific Index increased 0.6%.
- The Bloomberg Dollar Spot Index fell 0.8%.
- The euro advanced 0.5% to $1.1392.
- The Japanese yen appreciated 0.5% to 107.21 per dollar.
- The yield on 10-year Treasuries dipped four basis points to 0.79%.
- Germany’s 10-year yield fell two basis points to -0.33%.
- Britain’s 10-year yield fell seven basis points to 0.267%.
- The Bloomberg Commodity Index advanced 0.4%.
- West Texas Intermediate crude increased 1.3% to $39.44 a barrel.
- Gold climbed 0.5% to $1,730.40 an ounce.