The stock markets in the United States struggled to maintain its momentum after recording huge gains yesterday when the Federal Reserve alleviated concerns about the impact of higher interest rates on the country’s economic growth.
Sign up for our free newsletter
The minutes of the October meeting of Federal Reserve indicated that the economy is strong enough to withstand an interest rate hike as soon as next month. The Fed also emphasized that the pace of any interest rate increase will be gradual.
Exclusive: York Capital to wind down European funds, spin out Asian funds
York Capital Management has decided to focus on longer-duration assets like private equity, private debt and collateralized loan obligations. The firm also plans to wind down its European hedge funds and spin out its Asian fund. Q3 2020 hedge fund letters, conferences and more York announces structural and operational changes York Chairman and CEO Jamie Read More
The recent economic data boosted the confidence of policymakers to raise interest rates. The labor market continues to improve as the economy added 271,000 jobs last month. The Consumer Price Index (CPI) climbed 0.02% and the manufacturing index rose 0.04%.
Today, the Department of Labor reported that the number of people who applied for unemployment benefits declined for the week ended November 14.
David Spika, a global investment strategist at GuideStone Capital Management, told Bloomberg, “The market probably needs to move sideways for a while. The way we rebounded from the correction was rapid. There are more reasons to go down than up.”
In a note to investors, Barclays global equity strategists, Ian Scott, and Dennis Jose commented, “We do think Fed policy could impact leadership within the market. In the past, higher rates have favored value over quality and growth, while inhibiting the performance of early cycle cyclical such as Consumer Discretionary.”
On the other hand, Andrew Lapthorne and his fellow analysts at Societe Generale, said, investors are increasingly focused on the possibility of a December rate hike, the continuing strength of the dollar and its impact on the US economic growth.
Lapthorne and his colleagues said while the interest rate hike is a confirmation of the US economic leadership, they remained concerned about US corporate profits. They noted that the profits and revenues of companies in the United States are declining, and the strong dollar is a large part of the problem.
- Dow Jones Industrial Average (DJIA) – 17, 732.82 (-0.02%)
- S&P 500- 2,081.23 (-0.11%)
- NASDAQ- 5,073.64 (-0.03%)
- Russell 2000- 1,166.52 (-0.45%)
- EURO STOXX 50 Price EUR- 3,448.93 (+0.50%)
- FTSE 100 Index- 6,392.93 (+0.81%)
- Deutsche Borse AG German Stock Index DAX- 11,085.44 (+1.14%)
- Nikkei 225- 19,859.81 (+1.07%)
- Hong Kong Hang Seng Index- 22,500.22 (+1.41%)
- Shanghai Shenzhen CSI 300 Index- 3,774.97 (+1.60%)
Stocks in Focus
The stock price of Square, the mobile payments services company, headed by Jack Dorsey, surged as much as 45% to $13.07 per share from its offering price of $9.00 per share during its initial public offering (IPO). The stock is trading at the New York Stock Exchange under the ticker “SQ.”
UnitedHealth Group declined more than 5% to $110.68 per share. The insurance company suspended marketing its Obamacare exchange plans for 2016 and reduced its earnings forecast citing low growth estimates for Obamacare enrollment.
Keurig Green Mountain surged more than 18% to $47.88 per share. The company reported better than expected earnings for the fourth quarter. Keurig Green Mountain’s non-GAAP earnings were $0.85 per share compared with the $0.71 per share consensus estimate.