Stock markets in the United States rallied after the Federal Reserve’s meeting minutes from April showed that policy makers observed a low risk on inflation. The minutes from the Federal Open Market Committee (FOMC) meeting last month indicated that policy makers discussed issues related to the eventual normalization of the stance and conduct of monetary policy.
Policy makers “generally favored the further testing of various tools including TDF to better assess their operation readiness and effectiveness.” The Fed did not make any decision regarding policy normalization.
With regards to the economic situation, policy makers observed that economic growth paused in the first quarter as a whole, but activity picked up in the latter part of the quarter. The trend was due to the temporary effect of the unusually cold and snowy weather earlier in the quarter. The Fed also noted that payroll employment rose in March while the unemployment rate remained at 6.7%.
The policy makers did not observe material change in the nation’s economic outlook since their March meeting. Some of the participants stressed that it was too early to confirm that the rebound of economic activity would put the economy on a path of sustained above-trend economic growth. Others identified some possible sources of downside risk to growth, such as the persistent slowdown of the housing sector or potential international developments, including the further slowdown of China’s economic growth and an increase in geopolitical tensions between Russia and Ukraine.
Darrel Cronk, deputy chief investment officer at Wells Fargo Private Bank, commented that the Fed minutes offer no big surprises. He said, “There was more of the same and that means more dovish statements. We continue to think the domestic equity markets will climb higher. The fundamentals are good.”
On the other hand, Stifel Nicolaus & Co. fund manager Chad Morganlander told Bloomberg that the equity markets gained because of “expectation of stronger economic growth.” He added, “Economic growth as well as earnings will begin to accelerate in the warmer months, which will increase investors’ risk appetites.”
U.S. Markets
- Dow Jones Industrial Average (DJIA)- 16,533.06 (+0.97%%)
- S&P 500- 1,888.03 (+0.81 %)
- NASDAQ- 4,131.54 (+0.85%)
- Russell 2000- 1,103.63 (+0.52%)
European Markets
- EURO STOXX 50 Price EUR- 3,187.08 (+0.73%)
- FTSE 100 Index- 6,821.04 (+0.28%)
- Deutsche Borse AG German Stock Index DAX- 9,697.87 (+0.61%)
Asia-Pacific Markets
- Nikkei 225- 14,042.17 (-0.24%)
- Hong Kong Hang Seng Index- 22,836.52 (+0.01%)
- Shanghai Shenzhen CSI 300 Index- 2,115.77 (+0.95%)
Stocks in Focus
The stock price of American Eagle Outfitters (NYSE:AEO) dropped more than 6% to $10.60 per share after the company reported disappointing financial results. The retailer also said it will close 150 stores in North America over the next three years. The company reported earnings of 2 cents per share for the quarter that ended May 3, compared with its 14 cents per share in the same period a year ago.
Shares of Tiffany & Co. (NYSE:TIF) climbed more than 9% to $96.30 per share after the second largest luxury jewelry retailer posted better-than-expected earnings for the first quarter. The company delivered 97 cents in earnings per share, up from 65 cents in earnings per share last year. Its earnings were also higher than the 78 cents per share forecast by analysts.
Netflix, Inc. (NASDAQ:NFLX) gained more than 5% to $390.60 per share after the company announced its expansion in several countries in Europe, including Austria, Belgium, France, Germany, Luxembourg and Switzerland.
