The stock markets in the United States particularly the NASDAQ and Russell 2000 rebounded by 0.07% and 1.46% respectively, today. The Dow Jones Industrial Average (DJIA) ended the trading session on the red.
The U.S. equities recovered some of its early losses after James Bullard, the president of the Federal Reserve Bank of St. Louis stated that policy makers should consider postponing their plan to end th/e bond-buying program to stop the decline of inflation expectations.
Mott Capital Management 4Q20 Commentary
Mott Capital Management commentary for the fourth quarter ended December 31, 2020. Q4 2020 hedge fund letters, conferences and more We survived and flourished in 2020. That is the good news. For the year, the Mott Capital Management Thematic Growth Composite climbed by 25.4% net of fees and transaction costs, easily beating the S&P 500 Read More
The Federal Reserve’s target inflation rate is 2%. Data from Bloomberg showed that the market forecast for average inflation over the next five years was 1.49%. In June, the average market forecast for inflation was 2.1%.
“Inflation expectations are declining in the U.S. That’s an important consideration for a central bank. And for that reason, I think that a logical policy response at this juncture may be to delay the end of the QE,” said Bullard.
In addition, Bullard said the economic fundamentals in the United States are still strong. According to him, the market turmoil was caused by the downgrades of growth prospects for Europe.
In a telephone interview with Bloomberg, Chad Morganlander, a money manager at Stifel Nicolaus & Co. said, “The Bullard comments were a short-term shot of adrenaline. The overall markets are hooked on QE and liquidity being withdrawn.” He added that policy makers should reconsider their plans to end the quantitative easing program.
- Dow Jones Industrial Average (DJIA) – 16,108.25 (-0.21%)
- S&P 500- 1,862.41 (-0.00%)
- NASDAQ- 4,218.33 (+0.07%)
- Russell 2000- 1,088.11 (+1.46%)
- EURO STOXX 50 Price EUR- 2,874.65 (-0.62%)
- FTSE 100 Index- 6,195.91 (-0.25%)
- Deutsche Borse AG German Stock Index DAX- 8,582.90 (-0.13%)
- Nikkei 225- 14,738.38 (-2.22%)
- Hong Kong Hang Seng Index- 22,900.94 (-1.03%)
- Shanghai Shenzhen CSI 300 Index- 2,444.40 (-0.79%)
Stocks in Focus
The stock price of Chesapeake Energy Corporation (NYSE:CHK) surged nearly 17% to $20.79 per share after announcing its plan to sell its natural gas and oil shale fields to Southwestern Energy Company (NYSE:SWN) for $5.4 billion.
The deal includes 1,500 wells and drilling rights across 413,000 acres in the southern Marcellus Shale and eastern Utica Shale in Pennsylvania and West Virginia. The shares of Southwestern Energy Company (NYSE:SWN) dropped more than 10% to $31.97 per share.
eBay Inc (NASDAQ:EBAY) declined almost 5% to $47.88 per share after the company issued lower than expected earnings and revenue outlook for the fourth quarter. The company estimated that it would be able to achieve earnings in the range of $0.88 to $0.91 per share and revenue of around $4.85 billion to $4.95 billion. Wall Street analysts have a consensus estimate of $0.91 in earnings per share and $5.63 billion in revenue for the fourth quarter.
The shares of United Rentals, Inc. (NYSE:URI) increased almost 7% to $99.64 per share after the company reported adjusted earnings and revenue that beat the consensus estimates. The company posted $2.20 in earnings per share and $1.54 billion in revenue. Analysts expected the company to report $2.08 in earnings per share and $1.51 billion in revenue.