The stock markets in the United States rallied on Friday after Federal Reserve Chairman Ben Bernanke stated the country’s economy is expected to grow faster and reiterated the Fed’s commitment to maintain low interest rates. But by the end of the trading session, the NASDAQ Composite (INDEXNASDAQ:.IXIC) and the S&P 500 (INDEXSP:.INX) declined.
Bernanke said, “The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for U.S. economic growth in coming quarters.”
In his 2021 year-end letter, Baupost's Seth Klarman looked at the year in review and how COVID-19 swept through every part of our lives. He blamed much of the ills of the pandemic on those who choose not to get vaccinated while also expressing a dislike for the social division COVID-19 has caused. Q4 2021 Read More
Last month, the Federal Reserve decided to reduce its $85 billion monthly bond-buying program to $75 billion effective this month. According to Bernanke, the Fed’s decision to taper its bond purchases “did not indicate any diminution of its commitment to maintain a highly accommodative monetary policy for as long as needed.”
On the other hand, Jeffrey Lacker, president of the Federal Bank of Richmond, said that the policy makers will continue to consider stimulus reductions given the improvements in the labor market. He said, “It made sense to initiate the process of bringing the program to a close. I expect further reductions in the pace of purchases to be under consideration at upcoming meetings.” He also projected that U.S. economy will grow by 2% this year.
Wall Street strategists are projecting that the returns of equities will slow down this year. Data compiled by Bloomberg indicated that the S&P 500 is predicted to end 2014 at around 1,950 points, which represents a 5.5% gain from 2013. Yesterday, the stock markets suffered a sell-off.
Donald Selkin, chief market strategist at National Securities Corp told Bloomberg, “Today is portfolio balancing and a little bargain hunting after the selloff yesterday. There was no fundamental reason for the decline yesterday. Everyone was kind of stunned.”
Meanwhile, Terry Sandven, chief equity strategist at US Bank Wealth Management, opined, “I still think this is a buy-on-the dip equity market. He added, “2014 is likely to be a transition year, driven more by earnings growth than Fed-driven liquidity and PE expansion.”
- Dow Jones Industrial Average (DJIA)- 16,469.99 (+0.17%)
- S&P 500- 1,831.31 (-0.03%)
- NASDAQ- 4,131.91 (-0.27%)
- Russell 2000- 1,150.40 (-0.46%)
- EURO STOXX 50 Price EUR- 3,074.43 (+0.47%)
- FTSE 100 Index- 6,730.67 (+0.19%)
- Deutsche Borse AG German Stock Index DAX- 9,435.15 (+0.37%)
Asia Pacific Markets
- Nikkei 225- 16,291.31 (+0.69%)
- Hong Kong Hang Seng Index- 22,817.28 (-2.24%)
- Shanghai Shenzhen CSI 300 Index- 2,290.78 (-1.34%)
Stocks in Focus
The stock price of General Motors Company (NYSE:GM) declined by more than 3% to $39.57 per share after the automaker reported that its sales performance for the month of December declined 6.3%. The company said bad weather conditions and discount pressure from competitors affected its sales. General Motors Company (NYSE:GM) sold 230,137 vehicles in December, down from 245,733 vehicles sold in the same month a year ago.
Security firm FireEye, Inc. (NASDAQ:FEYE) surged more than 39% to as much as $57.22 per share today. The significant increase in the stock price of the company was primarily driven by its transaction to acquired Madiant, a security firm expert in detecting malware.
Micron Technology Inc. (NASDAQ:MU) declined more than 3% to $20.97 per share after Doug Freedman, analysts at RBC Capital Markets downgraded his rating for the stock to sector perform. According to him, the valuation of the company “appears ahead of fundamental improvements” and he perceived some risks.