Stock markets in the United States fluctuated today following significant gains, with the S&P 500 hitting a record level yesterday, driven by the Federal Reserve’s statement that it will maintain low interest rates for a considerable time amid signs of economic growth. Today, the S&P 500 and the Dow Jones Industrial Average (DJIA) ended the trading session with .12% and .09% gains, respectively. The NASDAQ dropped .08%.
The Fed reduces QE
The Federal Reserve reduced its monthly bond-buying activity by another $10 billion, cutting it to $35 billion, which shows that it is on track to end the program this year. Lex Van Dam, a fund manager at Hamstead Capital LLP, described Federal Reserve Chairperson Janet Yellen as a “super dove” in an interview with Bloomberg. He also said, “There remain very few alternatives for your cash other than putting it in stocks. The trend remains up in markets. I believe in the Fed. The economy has recovered on financial engineering.”
When 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
Yellen talked down concerns regarding asset-price bubbles and incipient inflation and emphasized the need for creating more jobs to put Americans back to work. The labor market showed signs of steady improvement as the number of workers who filed for unemployment benefits was lower last week.
On the other hand, Bill Schultz, chief investment officer at McQueen Associates, commented, “People are really taking a more constructive view to see what happens with the market here going forward. I think you have to see if the trend continues.”
- Dow Jones Industrial Average (DJIA)- 16,921.07 (+0.09%)
- S&P 500- 1,959.42 (+0.12 %)
- NASDAQ- 4,359.33 (-0.08%)
- Russell 2000- 1,183.32 (+0.02%)
- EURO STOXX 50 Price EUR- 3,314.80 (+1.09%)
- FTSE 100 Index- 6,808.11 (+0.44%)
- Deutsche Borse AG German Stock Index DAX- 10,004.00 (+0.74%)
- Nikkei 225- 15,361.16 (+1.62%)
- Hong Kong Hang Seng Index- 23,167.73 (-0.06%)
- Shanghai Shenzhen CSI 300 Index- 2,126.91 (-1.54%)
Stocks in Focus
The stock price of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) climbed almost 10% to $9.09 per share after the struggling Canadian smartphone manufacturer reported GAAP net income of $23 million or 4 cents in earnings per share on $966 million in revenue. CEO John Chen said, “Our performance in fiscal Q1 demonstrates that we are firmly on track to achieve important milestones, including our financial objectives and delivering a strong product portfolio.” He added that the company is focusing on its growth plan to be able to return to profitability.
Shares of Coach Inc (NYSE:COH) declined nearly 9% to $35.69 per share after the company disclosed that it will close 70 stores in North America and expects its revenue to drop in the low double-digits as it experiences difficulties in competing against its fast-growing rivals in the industry.
KBR, Inc. (NYSE:KBR) plummeted more than 7% to $24.46 per share after the energy industry construction contractor announced that it will conduct a strategic review of its business. KBR incurred losses at its assembly plant in Canada and two construction projects in the United States.