Ad

Thursday, April 7, 2022

U.S. stocks struggle for direction after back-to-back Fed-inspired losses

 HP shares jump 15% after Warren Buffett’s Berkshire Hathaway reveals stake 

U.S. stock indexes traded between the lower dividends and losses early Thursday, two days after the downturn, as investors reacted to the Federal Reserve's tightening plans and its impact on the ever-increasing bond market.



What’s Happening

    The Dow Jones Industrial Average DJIA is up 55 points, or 0.2%, up 34,441.

    The S&P 500 SPX raised 4 points, or 0.1%, to 4,485.

    The Nasdaq Composite COMP rose by 25 points, or 0.2%, to 13,914.

    On Wednesday, the Dow fell 145 points, or 0.4%, the S&P 500 lost 1% and the Nasdaq Composite fell 2.2%. The S&P 500 closed below its 200-day average and fell 6% year-on-year.


    What’s driving markets

    Minutes of the last meeting of the Federal Open Market Committee, released on Wednesday, showed the central bank estimating a plan to reduce its bonds by $ 95 billion a month as it tries to curb inflation. The Fed’s warning hit tech stocks especially on Wednesday as their ratings were heavily dependent on interest rate levels.


    "It is not surprising to see that growth names lead to losses, given the well-known sensitivity of these megacap stocks, with Nasdaq now about 5% of the latest discount," said Michael Brown, head of market intelligence. "Although, as time goes on, I am always cautious about money, I think these terms are likely to work very well in the medium term as economic activity weakens and the market puts a premium on growth."


    President of St. Louis Fed's James Bullard on Thursday dismissed a recession, saying the U.S. increase Bullard called on the Fed to raise interest rates immediately to curb inflation, saying it wanted to raise the Fed's interest rate of more than 3% this year.


    Bank of America price analysts say the 10-year BX: TMUBMUSD10Y yield could reach 3%, although they see a fair value of 2.05% to 2.7%. Yields returned to an upside after an early decline on Thursday, rising above the base point to 2.618%.


    “The risks of withdrawal from the Treasury over the next 10 years are increasing, given: (1) market prices are high potential for long-term inflation expectations and a view of the level of neutrality; and (2) a challenging environment for supply / demand that accelerates the near-term volatility of the bearish system and increases the ability to move forward against bases, ”said BofA analysts.


    The US Department of Labor said the first unemployment rate dropped by 5,000 to 166,000 last week on April 12, the lowest number since 1968.


    "After pulling back two days around Fed minutes, the market may have time to divert the Fed's vision," said Managing Director Mike Loewengart, Investment Strategy E * TRADE, Morgan Stanley. “If there is no alternative, the market prefers assurances, so clarification of the case is probably acceptable. And while the Fed is waging its war on inflation, the week's worthless weekly claims are an example of a thriving labor market and one small thing on the Fed's plate. The study gives air under the wings of the Fed to combat inflation without fear of impending recession. "


    What companies are they focused on?

    Shares of HP Inc. HPQ skipped 15% after Warren Buffett's Berkshire Hathaway Inc revealed that it had taken an 11% share in the personal computer maker.

    Following the extension of the student loan suspension program, SoFi Technologies Inc. SOFI prepared its vision for the full financial year on Wednesday, as management now thinks the suspension will last at least a year. Shares down 9%.

    Shares of Levi Strauss & Co. LEVI fell 1.1% after a retailer late Wednesday reported quarterly profits and auctions above Wall Street forecasts.

    Shares of ConAgra Brands Inc. The CAG fell 0.1% after the food company issued disappointing guidelines.

    What other assets are doing

      ICE U.S. Dollar Index DXY fell 0.1%.

      Bitcoin BTCUSD has risen 0.5% to trade above $ 43,500.

      Oil futures rise, blossoming after a three-week low closure, US benchmark CL rose 0.9% to $ 97.14 a barrel, while futures gold GC00 rose 0.4% to trade below $ 1,932 iounce.

      Stoxx Europe 600 XX: SXXP up 0.1%, while the London FTSE 100 UK: UKX lost 0.3%.

      Shares in Asia, Shanghai Composite CN: SHCOMP fell 1.4% lower, while Hang Seng Index HK: HSI fell 1.2% in Hong Kong and Japan's Nikkei 225 JP: NIK fell. at 1.7%.


      Read More: