Stocks trade mixed ahead of Fed decision, tech stocks slide
Stocks were mixed on Wednesday morning as investors waited for a major monetary policy decision and updated economic outlook from the Federal Reserve. Government bond yields rose and the benchmark 10-year Treasury note yield surged above 1.65%.
The S&P 500 fell about 0.4% while the Dow traded just above the flat line. The Nasdaq fell 1% as technology stocks resumed their decline on higher government bond yields. The CBOE Volatility Index (VIX) moved 20 after falling to a pandemic low of 19.3 on Tuesday, or its lowest level in a year after months of virus-related fear in the markets.
Investors look forward to the Federal Reserve’s monetary policy decision in March on Wednesday afternoon, as well as Fed Chairman Jerome Powell’s press conference later that day. The comment will explain the central bank’s view of the economic recovery and signal to investors when a change in current monetary policy stance might take place. For now, the Fed has signaled that it will keep monetary policy loose, with policy rates close to zero and asset purchases of $ 120 billion per month as the economic recovery unfolds.
“In general, I think the best step is not a step,” JPMorgan Asset Management’s global market strategist Jack Manley told Yahoo Finance on Tuesday. “Certainly we won’t see any immediate changes in policy, but I think markets are a little concerned about the language the Fed will be using to explain the fact that things have been a lot better than I had originally expected at least their last meeting. “
“They have more stimulus than expected, more successful vaccine rollouts than expected, a more resilient labor market that is recovering faster than expected, and of course, oil prices that have gone up I think much more than expected,” he added. “The best I think we can get out of the Fed is to realize that growth is accelerating, that the recovery story is more permanent, that the worst is behind us, but that there is no immediate and urgent risk of inflation … that is the green light for investors to keep this party going. “
The story goes on
Fears that a rapid rise in inflation could lead to a faster-than-expected tightening of monetary policy kept investors on their toes last month, sparking a sell-off of tech names in early March and spurring a rotation into cyclical stocks like energy and banking stocks. Still, Powell will most likely continue to telegraph that economic recovery advances remain well below the threshold, according to many economists, to trigger a move by the Fed.
“We expected Mr. Powell to argue that it was premature to speak of a short-term policy response to events that have not yet taken place and may not occur at all or much later than currently expected,” said Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note.
11:36 ET: Disney stocks jump after CEO says California Parks will reopen on April 30th: CNBC
Disney’s (DIS) stocks rose on Wednesday after CEO Bob Chapek told CNBC that the company’s two California theme parks will reopen on April 30th.
The date would mark a year since the theme parks – California Adventure and Disneyland in Anaheim – were temporarily closed because of the pandemic. Despite California issuing new state guidelines allowing amusement parks to reopen on April 1 with capacity restrictions, Chapek announced earlier this month that it would take more weeks for the company to bring back workers on leave and prepare the parks for reopening. The company laid off tens of thousands of workers during the pandemic, mostly in the theme park and cruise operations.
10:57 a.m. ET: The capital inflows over the past three weeks have been the largest since last year’s market low: BofA
According to new data from Bank of America, stock traders have piled into stocks amid the recent sell-off of technology stocks in recent weeks.
Bank of America’s customer stock inflows totaled $ 3.8 billion last week, which was in the 95th percentile of the bank’s data history.
“The inflows over the past three weeks have been the largest in three weeks after the market bottomed out in March,” the strategists said in a note on Wednesday. “While seven sectors out of eleven had inflows, it was another big week for Tech and Cons Disc: both had weekly inflows near record levels for the third straight week.”
However, these strong buying patterns are likely to be a sign of weaker returns in the short term, the strategists added.
“Extreme inflows are usually a sign of weak short-term (month-long) returns and another sign of increasingly euphoric stock sentiment,” they said.
9:30 am ET: S&P 500 and Dow drift ahead of Fed decision; Nasdaq slides
Here the markets were traded after the opening bell on Wednesday morning:
S & P 500 (^ GSPC): -15.66 points (-0.4%) to 3,947.05
Dow (^ DJI): +5.75 points (+ 0.02%) to 32,831.7
Nasdaq (^ IXIC): -140.47 points (-1.04%) to 13,331.23
Raw (CL = F.): – $ 0.59 (-0.91%) to $ 64.21 per barrel
Gold (GC = F.)– $ 3.20 (-0.18%) to $ 1,727.70 per ounce
10-year state treasury (^ TNX): +4.3 bps for 1.666%
8:30 a.m. ET: Housing starts have declined the most in February since April 2020
New construction fell at the fastest rate since April 2020 in February and fell much more than expected as last month’s storm and higher interest rates weighed on real estate market activity.
Housing starts fell 10.3% in February to a seasonally adjusted annual rate of 1.421 million, the Ministry of Commerce announced on Wednesday. This followed an upwardly revised 5.1% decline in January. Consensus economists expected a decline of just 1.3% in February, according to Bloomberg consensus data.
Building permits, which serve as an indicator of future housing construction, fell by 10.8%. It also beat the 7.2% decline expected for the month and more than reversed an upwardly revised 10.7% jump in January.
7:19 ET Wednesday: Stock futures indicate a mixed open
Here, the markets were trading as of 7:19 a.m. ET on Wednesday morning:
S&P 500 Futures (ES = F): 3,957.5, minus 5 points or 0.13%
Dow Futures (YM = F.): 32,861.00, plus 26 points or 0.08%
Nasdaq Futures (NQ = F.): 13,087.75, a decrease of 63.75 points or 0.48%
Raw (CL = F.): – $ 0.75 (-1.16%) to $ 64.05 per barrel
Gold (GC = F.)– $ 0.90 (-0.05%) to $ 1,730.00 per ounce
10-year state treasury (^ TNX): +3.4 bps to give 1.6257%
6-01 am ET Tuesday: Stock futures open a little higher
Here were the key moves in the markets as of 6:01 p.m. ET:
S&P 500 Futures (ES = F): 3,969.00, plus 6.5 points or 0.16%
Dow Futures (YM = F.): 32,873.00, plus 38 points or 0.12%
Nasdaq Futures (NQ = F.): 13,173.25, plus 21.75 points or 0.17%
US flags fly in front of the New York Stock Exchange (NYSE) and can be seen in New York, USA on February 16, 2021. REUTERS / Brendan McDermid
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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