U.S. stocks plummeted Thursday as investors continued to monitor the continued effects of corporate profits against the background of inflation and further tightening of Fed policy.
The S&P 500 went down Thursday afternoon to erase previous gains. The Dow Jones Industrial Average is also down. The Nasdaq collapsed and intensified Wednesday's losses, when the tech-heavy index was weighed down by Netflix shares. At the time, Tesla (TLSA) stocks plummeted after the electric car manufacturer exceeded the expected hand in its first quarter financial results.
To date the combined three-month results for this reporting period have cast doubt on whether corporate profits will be able to stabilize stock markets operating in an already challenging economic environment. As inflation moves at the fastest rate in 40 years and weighs heavily on economic activity, so does the U.S. The Federal Reserve is in a position to expand its stronghold despite slowing growth, many experts have warned of continued choppiness in dangerous goods.
"The big question is whether the revenue can support this kind of slow growth base and [firm] Fed policy," Deepak Puri, chief investment officer of Deutsche Bank, told on Wednesday. "It looks like it is. The companies can - historically have been.
The nature of the same market appeared in 2017 and 2018, when the Federal Reserve last raised interest rates before this year, Puri added. At the same time, however, the decline in business tax rates under previous management helped "reduce the burden of high capital costs," Puri said.
"In this case, I don't really see a lot of spending coming our way," Puri said. "So it could be one of those times when the market may be a little more flexible than what the participants expected."
Some experts also suggest that the rapid growth in profits this year may not be enough to propel the market, especially in the event of a slowdown in technology company, given that many of these other words weigh heavily in large stock indexes.
"Here's a big risk in my view in the broader market right now: The broader market is focused on just a few words. What happens if their earnings or second quarter earnings are too bad, or if they have a second-half profit report ... is that really surprising?" "S&P, in my opinion," Eddie Ghabour, founder and co-founder of Key Advisors Group, on Wednesday.
"No one can be shot in this area," he added. "And I think the caution here after the huge increase we have seen over the past few years in dangerous goods is just a smart thing to do. Because there will be amazing shopping opportunities that will come when this bubble explodes."
2:31 p.m. ET: Powell states that 'it is very important to restore price stability,' suggesting that the 50-point rise is 'on the table'
Federal Reserve Chairman Jerome Powell reiterated on Thursday that the main purpose of the central bank at this time is to reduce inflation while trying to avoid plunging the economy into recession.
"Our goal is to use our tools to find the need and also provide synergies so that inflation can go down, and we can do that without falling like a recession," Powell said during an interview with the International Monetary Fund team on Thursday. it is important to restore price stability. Without price stability, indeed the economy does not function without price stability. We need that to have a strong labor market in the long run. We need financial stability. So we have to do it. ”
One of the key tools the Federal Reserve should play in inflation is rising interest rates, higher interest rates and ultimately lower inflationary pressures. With this in mind, Powell suggested a 50-point increase in the next Fed meeting could be made to achieve the goal of state bank stability.
"We are really committed to using our tools to recoup the 2% inflation," he added. And I think there's something in the loading idea at the end ... that points the way 50 points are on the table. "
12:51 p.m. ET: Daly of the San Francisco Fed says interest rates should go 'faster' to neutral
San Francisco Federal Reserve President Mary Daly said on Thursday interest rates should rise sharply this year as they face inflation.
Daly, who is not a member of this year's Federal Open Market Committee but also participates in monetary policy discussions with the committee, said he supported a 50-point increase in the state budget by the next central bank policy-setting meeting earlier this year. May. Such a move would mark the first increase in more than 25 points from the Fed since 2000.
10:21 a.m. ET: Elon Musk considers bid for Twitter purchase, receives $ 46.5 billion in commitment letters
Tesla CEO Elon Musk is considering acquiring Twitter shares (TWTR) with a tender offer of $ 54.20 per share, according to a file on Thursday.
Musk has so far received nearly $ 46.5 billion in pledges to finance, the file said. With the tender offer, Musk will buy shares directly from current shareholders in order to finally get Twitter.
The filing comes after Musk last week issued an offer to purchase Twitter for $54.20 per share, equivalent to more than $40 billion. However, Twitter last week adopted a "poison pill," or limited duration shareholder rights plans, to try and ward off a takeover and prevent Musk from amassing a larger stake in the firm. Musk disclosed he had taken a more than 9% stake in Twitter earlier this month.
Twitter shares rose 0.4% intraday Thursday morning.
9:30 a.m. ET: Stocks open higher, tech shares stage a recovery after Netflix-led slide
Here's where markets were trading just after the opening bell:
8:35 a.m ET: Weekly unemployment claims come in at 184,000, holding near multi-decade lows
Weekly unemployment claims have been held close to their low levels since the 1960s, with strong labor markets and unemployment rates remaining a prominent position in the U.S. economy.
Unemployment applications for the first time were 184,000 last week on April 16, according to a recent report by the Department of Labor. Claims reached 186,000 last week.
Although the first entry is slightly included in the latest weekly data, the total remains close to the 50-year decline. New claims have reached the lowest level since 1968 at 166,000 last month.
Ongoing claims, which include the number of Americans collecting profits for weeks, have also dropped dramatically to lower levels by a decade. These have come in at less than 1.5 million in a week to reach their lowest level since 1970.
7:39 a.m. ET: Stock futures head for a higher open
Here's where stocks were trading Thursday morning:
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6:12 p.m. ET: Stock futures trade little changed
Here's where stocks were trading Tuesday evening:
