The stock markets in the United States fluctuated and eventually ended higher after the Federal Reserve released the minutes of its meeting indicating that policy makers are divided on raising interest rates.
Some of the members of the Federal Open Markets Committee (FOMC) believed that it is appropriate to increase the interest rates in June while others want to wait until March next year.
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Several policy makers said economic data and outlook likely warrant the start of normalization during their meeting in June. Other members are anticipated that the impact of the declines in oil prices and the strength of the dollar will continue to weigh on inflation over the near term.
They suggested that it was not appropriate to begin raising interest rates until later this year. A couple of policy makers suggested that economic outlook calls for interest rate hikes by 2016.
In a note to investors, BTIG chief strategist, Dan Greenhaus commented, “This dichotomy speaks to the division on the board; they, as a whole, simply aren’t sure what they’re supposed to be doing right now given the divergent messages from any number of places.”
Policymakers noted that the U.S. GDP growth moderated during the first quarter and the labor market conditions improved further. The unemployment rate declined to 5.5% in February. According to them, the consumer price inflation was restrained significantly by the decline of energy prices. Inflation remained below the 2% target.
David Lefkowitz, a senior equity strategist at UBS Wealth Management Research, said, “The market wants to be comfortable that any pivot to higher interest rates is not going to jeopardize the recovery. The odds that the Fed moves too much are relatively low, just because the inflation environment is benign.”
- Dow Jones Industrial Average (DJIA) – 17,902.51 (+0.15%)
- S&P 500- 2,081.90 (+0.27%)
- NASDAQ- 4,950.82 (+0.83%)
- Russell 2000- 1,261.55 (+0.65%)
- EURO STOXX 50 Price EUR- 3,742.63 (-0.69%)
- FTSE 100 Index- 6,937.41 (-0.35%)
- Deutsche Borse AG German Stock Index DAX- 12,035.86 (-0.72%)
- Nikkei 225- 19,789.81 (+0.76%)
- Hong Kong Hang Seng Index- 26,236.86 (+3.80%)
- Shanghai Shenzhen CSI 300 Index- 4,295.80 (+0.84%)
Stocks in Focus
The stock price of Mylan increased more than 14% to $68.36 per share. The company offered to acquire Perrigo for $205 per share or $28.9 billion in cash and stock. The offer represents a 25% premium to the closing price of Perrigo on Tuesday. Perrigo’s stock price rose more than 18% to $195 per share.
The shares of Global Payments gained almost 7% to $98.61 per share after reporting higher earnings for its fiscal third quarter. The company said its net income rose from $55.1 million or $0.76 per share to $62.6 million or $0.93 per share. Its cash diluted earnings increased 19% from $0.96 to $1.14 per share.
OneBeacon Insurance Group rose almost 6% to $15.89 per share due to the report that its majority owner, White Mountains Insurance Group is exploring a sale. The specialty property and casualty insurer attracted the interest of Fosun International Limited.