The stock markets in the United States declined as investors focus their attention on the upcoming meeting of the Federal Open Market Committee (FOMC), which is expected to decide whether the U.S. economy and the global financial market can handle a higher interest rate.
In an interview with Bloomberg, Michael Gayed, chief investment strategist at Pension Partners LLC commented that the market is experiencing a “tug-of-war” again today. According to him, “Nothing is going to matter until we know what the fed’s going to do. I think it’s going to be a fun week.”
Abacab Fund Sees Mispricing In Options As Black-Scholes Has Become “Inadequate”
Abacab Asset Management's flagship investment fund, the Abacab Fund, had a "very strong" 2020, returning 25.9% net, that's according to a copy of the firm's year-end letter to investors, which ValueWalk has been able to review. Commenting on the investment environment last year, the fund manager noted that, due to the accelerated adoption of many Read More
Investors still believe that policy makers will increase interest rates this year. However, most traders suggest that the Federal Reserve will not raise rates this week. According to them, there is only 28% chance for an interest rate hike this week and a 58% chance on December.
The International Monetary Fund (IMF) repeatedly urged the Federal Reserve to delay raising interest rates until next year and wait for “greater signs of wage or price inflation.”
Jim Paulsen, chief investment strategist at Wells Capital Management, said, “The biggest thing to watch is whether the market goes into
Wednesday-Thursday relatively stable or if it doesn’t. If it’s more stable, this could be the last piece of the determinant for the Fed to go ahead and raise rates. They cannot do this if the markets are in free-fall.”
On the other hand, Randy Frederick, managing director of trading and derivatives at Charles Schwab commented, “The market is in a wait-and-see mode” until Thursday unless there is a major movement in China, oil prices or dollar.
- Dow Jones Industrial Average (DJIA) – 16, 358.56 (-0.45%)
- S&P 500- 1,951.24 (-0.50%)
- NASDAQ- 4,802.61 (-0.41%)
- Russell 2000- 1,153.21 (-0.40%)
- EURO STOXX 50 Price EUR- 3,175.62 (-0.39%)
- FTSE 100 Index- 6,084.59 (-0.54%)
- Deutsche Borse AG German Stock Index DAX- 10,131.74 (+0.08%)
- Nikkei 225- 17,965.70 (-1.63%)
- Hong Kong Hang Seng Index- 21,561.90 (+0.27%)
- Shanghai Shenzhen CSI 300 Index- 3,281.13 (-1.97 %)
Stocks in Focus
The stock price of Baxalta increased more than 4% to $37.35 per share driven by reports that Shire PLC is considering to increase its acquisition proposal. Shire initially offered to acquire Baxalta for 0.1687 of its American Depositary Receipts (ADRs) for every Baxalta share. The offer was equivalent to $45.23 per Baxalta share.
Chesapeake Energy gained more than 4% to $7.92 per share. The company recently signed a new gas gathering agreement with Williams Companies, another big step forward to reduce its costs and increase its earnings margin from its natural gas production. Chesapeake CEO Doug Lawler emphasized that they are doing their best to put the company in a position to win.
The stock value of Collegium Pharmaceutical surged more than 39% to $18.76 per share. The advisory committee of the U.S. Food and Drug Administration (FDA) unanimously recommended the approval of Xtampza ER for severe pain.