The stock markets in the United Stated declined prior to the scheduled speech of Federal Reserve Chairperson Janet Yellen. Investors are hoping to hear more clarity regarding the stimulus policy of the central bank.
In an interview with Bloomberg, Steve Bombardiere, an equity trader at Conifer Securities commented that the market is currently “in an earnings void” and waiting for Yellen’s speech tonight.
He also noted that people are going to start following someone in the hot hand. “Whenever they’ve said something markets move, then you have to watch that,” said Bombardiere.
2020 Letter: Maverick Is Set To Take Advantage Of The Great Hedge Fund Unwind [Exclusive]
Short-sellers have been feeling the pain for months, but especially over the last two weeks. In his fourth-quarter letter to investors, Maverick Capital's Lee Ainslie pointed out the unprecedented levels stock prices have reached and why short-sellers have been hurting. Q4 2020 hedge fund letters, conferences and more High market caps Ainslie noted that Read More
Last month Marko Kolanovovi, global head, derivative and quantitative strategies at JPMorgan Chase & Co. warned that “price insensitive” program traders would likely cause repeated market selloffs.
On September 3, the market reacted to his argument that robotic selling by quantitative investment funds tuned to volatility and price trends were only about 50% complete.
Over the past few weeks, the U.S. stock markets experienced volatility primarily due to uncertainties regarding the Federal Reserve’s actions particularly on raising the interest rates. The central bank maintained its current federal funds rate due to concerns regarding the recent developments in the global financial markets and the weakening Chinese economy.
The Federal Reserve put itself into a corner by talking about China and the emerging markets, according to Andrew Brenner, head of international fixed income at National Alliance Capital Markets.
Brenner added that the central bank is” very inconsistent” given the fact that it is considering raising rates between now and the end of the year while talking about concerns about China and emerging markets. He said, “It adds uncertainty to the market. That’s why equities have been performing poorly since mid-day of the Fed announcement.”
• Dow Jones Industrial Average (DJIA) – 16, 201.86 (-0.48%)
• S&P 500- 1,932.28 (-0.33%)
• NASDAQ- 4,734.48 (-0.38%)
• Russell 2000- 1,136.95 (-0.27%)
• EURO STOXX 50 Price EUR- 3,019.34 (-1.97%)
• FTSE 100 Index- 5,961.49 (-1.17%)
• Deutsche Borse AG German Stock Index DAX- 9,427.624 (-1.92%)
• Nikkei 225- 17,571.83 (-2.76%)
• Hong Kong Hang Seng Index- 21,095.98 (-0.97%)
• Shanghai Shenzhen CSI 300 Index- 3,285.00 (+0.67%)
ValueWalk Stocks in Focus
The stock price of Caterpillar dropped more than 6% to $65.79 per share. The company announced its plan to cut more than 10,000 jobs by 2018. The workforce reduction is part of its restructuring and cost reduction plan to lower operating costs by around $1.5 billion annually.
Newmont Mining climbed almost 8% to $16.78 per share. Analysts at Citigroup reiterated their Buy rating on the stock with a price target of $21 per share, a 35% potential upside.
Netflix gained nearly 6% to $103.82 per share. The online video streaming company recently updated its long-term view, which indicates its plan to invest $7 billion next year.