Fed’s Beige Book Could Cause Significant Market Moves

Fed’s Beige Book Could Cause Significant Market Moves
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The major indices are mixed at midday following a very active and mixed morning session, with the European Union’s (EU) highly anticipated stimulus package being at the center of attention. The announced amount of more than $825 billion in grants and loans was enough to briefly lift global risk assets in pre-market trading, and the dollar dipped to its lowest level in seven weeks against the euro in the wake of the promising plan. Especially the most lockdown-sensitive stocks and the Dow benefited from the global buying spree this morning, but the Nasdaq has been lagging behind again amid rumors regarding the de-listing of several large-cap Chinese firms.

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Q1 2020 hedge fund letters, conferences and more

The Fed's Beige Book To Be Published This Afternoon

In economic news, the Richmond Manufacturing Index came in at -27, well above both the consensus estimate and last month’s reading, continuing the string of positive surprises. The afternoon session will be highlighted by the Fed's beige book, which is basically the Central Bank’s detailed economic outlook, and a more bearish-than-expected forecast could cause significant moves in stocks and Treasuries. Mortgage applications were much-higher-than-expected last week, confirming yesterday’s blowout new home sales release and hinting on a quick rebound in the housing market.

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Jim ChanosWhen a liquidity crisis struck China's Evergrande Group in the summer of 2021, it shook the global markets. Debt payments by China's second-largest property developer by sales were estimated in the hundreds of billions of dollars, and the company missed several payments. Those missed payments led to downgrades by international ratings agencies, but the Chinese Read More

Market Wrap

Dow: 25,207, + 212 or 0.9%

S&P 500: 2,994, + 2 or 0.1%

Nasdaq: 9,220, - 120 or 1.3%

Russell 2000: 1,394, + 1 or 0.1%

Market breadth has been roughly in line with the price action in the major indices this morning, with advancing issues outnumbering decliners by a 7-to-3 ratio on the NYSE at midday. Only 7 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 27 stocks hit new 52-week highs. The major indices have been trading below their daily VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to intraday selling pressure. The tech sector got hammered this morning, together with healthcare-related issues, but financials and industrials have been pulling their weight, leading to an unusually strong divergence between the sectors, so traders are likely in for an eventful afternoon. Stay tuned!

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