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]]>Is there a stock market bubble?
Chairman Jerome Powell says the Federal Reserve isn’t focused on moving asset prices in a particular direction and wants investors to price in risk and let the markets work like normal.
U.S. equity markets plunged Thursday with the selloff accelerating in the final hour of trading as investors reacted to a resurgence in COVID-19 infections as more states reopened and also after the Federal Reserve warned of a slower economic recovery.
The Dow Jones Industrial Average fell 1,861 points or 6.9 percent, the fourth worst one-day point drop on record. The S&P 500 and the Nasdaq Composite sank 5.89 percent and 5.27 percent, respectively. The selling marked the sharpest one-day decline for the major averages since March 16.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 25128.17 | -1,861.82 | -6.90% |
| SP500 | S&P 500 | 3008.26 | -181.88 | -5.70% |
| I:COMP | NASDAQ COMPOSITE INDEX | 9512.050143 | -508.30 | -5.07% |
All of the S&P’s sectors fell, led by financials, energy and materials. Oil took a sharp turn lower with West Texas Intermediate crude oil sliding 8.23 percent to $36.34 a barrel.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| XLF | FINANCIAL SELECT SECTOR SPDR ETF | 23.10 | -2.09 | -8.30% |
| VAW | VANGUARD WORLD FDS VANGUARD MATERIALS ETF | 115.63 | -10.21 | -8.11% |
| XLE | ENERGY SELECT SECTOR SPDR ETF | 38.74 | -4.13 | -9.64% |
The major averages finished mixed on Wednesday, with the Nasdaq closing above 10,000 for the first time, after the Federal Reserve said interest rates would remain near zero through 2022 to support the economic recovery.
President Trump, a frequent critic of the central bank who has long pushed for low-interest rates, nonetheless disputed the Fed’s prediction that the comeback would be prolonged; he promised Twitter followers an upswing as soon as this fall.
In the meantime, initial jobless claims for the week through June 6 totaled 1.5 million, the government said Thursday, boosting the total number of job losses to 45 million since the shutdowns began in mid-March.
Meanwhile, Arizona and Texas were among the states that saw the number of new COVID-19 cases hit a fresh high on Wednesday while others, like California and Florida, saw infection counts near their previous peaks.
Looking at stocks, airlines, cruise operators and hotels were in the crosshairs amid fears a new wave of infections could stunt a rebound in bookings.
Drugmaker Regeneron Pharmaceuticals began human testing for an experimental COVID-19 treatment. The company will know the effectiveness of its antibody cocktail within a month.
The announcement comes after Reuters reported just before Wednesday’s closing bell that fellow drugmaker Eli Lily said one of its treatments could be authorized by September as long as trials go well.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| REGN | REGENERON PHARMACEUTICALS INC. | 597.37 | -9.22 | -1.52% |
| LLY | ELI LILLY & COMPANY | 144.13 | -6.87 | -4.55% |
Meanwhile, financial institutions remained under pressure for a second day as investors worried that an extended period of low interest rates would hurt returns.
Banks typically boost profitability by passing interest-rate increases on to borrowers more quickly than depositors, the main source of their cash. Periods of declining or unchanged rates stymie that practice.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| JPM | JP MORGAN CHASE & CO. | 97.13 | -8.93 | -8.42% |
| C | CITIGROUP INC. | 48.33 | -7.53 | -13.47% |
| WFC | WELLS FARGO & COMPANY | 26.73 | -2.98 | -10.03% |
In the food sector, GrubHub is merging with Amsterdam-based Just Eat Takeaway.com in an all-stock deal that values the Chicago-based online food-delivery platform at $75.15 a share, or $7.3 billion. The deal comes after merger talks between GrubHub and ridesharing app Uber collapsed last month amid regulatory concerns.
In retail, Target hiked its quarterly dividend by 3 percent, or 2 cents, to 68 cents per share.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GRUB | GRUBHUB INC | 61.76 | +2.71 | +4.59% |
| UBER | UBER TECHNOLOGIES INC. | 31.11 | -3.72 | -10.68% |
| TGT | TARGET CORP. | 118.00 | -2.00 | -1.67% |
As for metals, gold shot up 1.09 percent to $1,732 an ounce and U.S. Treasurys saw modest gains, pushing the yield on the 10-year note to 0.651 percent.
In Europe, France’s CAC paced declines, down 4.71 percent, while Germany’s DAX and Britain’s FTSE dropped 4.47 percent and 3.99 percent, respectively.
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Markets were lower across Asia, with Japan’s Nikkei sliding 2.82 percent, Hong Kong’s Hang Seng off 2.27 percent and China’s Shanghai Composite down 0.78 percent.
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]]>U.S. oil rates plunged Friday after China reported its gross domestic product shrank for the first time because recordkeeping began in 1992 as the economy was closed down to slow the spread of COVID-19
West Texas Intermediate petroleum for May delivery toppled by as much as 9.26 percent to $1803 a barrel, its most affordable given that October 2001, before trimming its losses. The contract, which ends on Wednesday, was trading at $1859
GOLD TARGETS ‘HIGHER HIGHS’ AS CORONAVIRUS FIGHT SAPS US DOLLAR STRENGTH
” Lingering weakness in domestic need together with a prolonged duration of worldwide weak point will most likely prevent GDP from going back to its pre-virus path until at least the middle of next year even in the middle of the ramp-up in policy stimulus,” composed Julian Evans-Pritchard, a Singapore-based senior China economist at the research firm Capital Economics.
China’s first-quarter gross domestic product fell 6.8 percent year-over-year in the January-to-March duration, according to the National Bureau of Statistics, larger than the 6 percent drop that economic experts surveyed by Reuters were anticipating.
The sharp economic contraction is a sneak peek of things to come for the remainder of the industrialized world, consisting of the United States, as the COVID-19 pandemic come from China, affecting its economy initially.
CORONAVIRUS REOPENING CARRIES HIGH STAKES FOR TRUMP IN 2020 RACE
Slower economic development indicates there will be less require for oil and its byproducts, consisting of gasoline and jet fuel. In a report out Thursday, OPEC said international need will fall by 6.9 million barrels per day in the middle of the COVID-19 pandemic. In a separate report out Wednesday, the U.S. Energy Info Administration said 9.3 million barrels per day of demand has been zapped.
The weaker demand exacerbates a supply excess that was intensified when a rate war broke out in between Saudi Arabia and Russia on March 9.
In virtual talks last weekend, the world’s biggest oil producers reached an agreement to trim international production by about 20 million barrels daily in May and June.
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OPEC and its allies will lower output by 9.7 million barrels a day while the remainder of the cuts originate from major players such as the U.S. and Canada, mainly as an outcome of lower costs. The arrangement also says OPEC producers and their allies will minimize production by 7.7 million barrels a day from July through next year.
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