Federal Reserve’s monetary policy decision, in which policymakers highlighted the ongoing economic concerns spurred by the coronavirus pandemic and measures taken to contain it. The Dow dropped more than 1,000 points for its worst drop in at least two months.
“What we’re seeing here is the market taking a breather,” Alex Piré, Seeyond Head of Client Portfolio Management, told Yahoo Finance on Thursday. He cited relatively bearish remarks from Fed Chairman Jerome Powell as partly responsible for telling investors “what the market wouldn’t like to hear. But the economic news that we’re getting has stayed fairly consistent.”
eyed a rise in new coronavirus cases in key states including Arizona, Florida, North Carolina and Texas. Meanwhile, the Labor Department’s weekly report showed another 1.542 million individuals filed new unemployment insurance claims for the week ended June 6, coming down slightly from the prior week’s 1.897 million.
Shares of companies that have been among the most set to benefit from easing social distancing measures pointed to another session of steep declines. Carriers American Airlines, United Airlines and Delta dropped in early trading Thursday, pointing to a third straight day of losses. Cruise companies Carnival, Royal Caribbean and Norwegian Cruise Line Holdings, along with lodging firms Wynn and Hilton, also tracked toward a third consecutive down day.
The Federal Open Market Committee’s (FOMC) Summary of Economic Projections indicated the Fed expects a steep 6.5% contraction in real GDP in 2020, with an unemployment rate at 9.3%. However, policymakers expect real GDP to rebound by 5.0% in 2021, with the unemployment rate dropping to 6.5%.
In its monetary policy decision, the Fed projected interest rates would remain near zero through 2022 and telegraphed that its pace of asset purchases would remain at minimum at the current rate.
did suggest the FOMC would continue discussing the mechanism going forward.
“Even though today’s FOMC meeting was somewhat of a placeholder until more meaningful choices are made in the next few meetings, the outcome was dovish nonetheless,” JPMorgan economist Michael Feroli said in a note. “The Fed kept interest rates steady and the accompanying interest rate forecast ‘dots’ indicate that rates are likely to remain pinned near zero for at least the next two-and-a-half years.
“Moreover, there was unusual unanimity in this expectation as only two participants expect any rate hikes by that time,” he added. “While the dots are individual forecasts, and not a Committee statement, the unusual lack of dispersion in those dots means it should be easier for the Committee to agree to more forceful forward guidance at upcoming meetings.”
11:00 a.m. ET: Dow drops more than 1,000 points as market rout deepens
Stocks extended declines as the morning session rolled on, with both the Dow and S&P 500 more than 3% lower.
The Dow’s more than 1,000-point decline was led by shares of Boeing, which slumped 10%. The consumer staples, communication services and consumer discretionary sectors led declines in the S&P 500, as all 11 sectors held in the red.
9:38 a.m. ET: Stocks slide, Dow sheds more than 750 points
Here were the main moves in markets as of 9:39 a.m. ET:
S&P 500 (^GSPC): -82.35 points (-2.58%) to 3,107.79
Dow (^DJI): -797.16 points (-2.95%) to 26,192.83
Nasdaq (^IXIC): -238.04 points (+2.38%) to 9,784.07
Crude (CL=F): -$2.88 (-7.27%) to $36.72 a barrel
Gold (GC=F): +$25.50 (+1.48%) to $1,746.20 per ounce
10-year Treasury (^TNX): -7.9 bps to yield 0.669%
8:32 a.m. ET: Producer prices rise for the first time in four months in May
the Bureau of Labor Statistics said Thursday. The pace of increase was greater than the 0.1% rise expected, according to Bloomberg data, and rebounded from a 1.3% decline in April.” data-reactid=”49″>An index of producer prices rose 0.4% in May for its first monthly increase since January, the Bureau of Labor Statistics said Thursday. The pace of increase was greater than the 0.1% rise expected, according to Bloomberg data, and rebounded from a 1.3% decline in April.
Over last year, producer prices dropped 0.8%, or less than the 1.2% decline expected and shown in April.
Excluding volatile food and energy prices, the producer price index (PPI) fell 0.1% in May over April, matching expectations.
8:30 a.m. ET: New jobless claims totaled 1.54 million last week
Weekly initial unemployment claims totaled 1.542 million for the week ended June 6, the Labor Department said in its weekly report. This was just slightly below expectations for 1.55 million, according to Bloomberg consensus data.
The prior week’s new unemployment claims were revised up slightly to 1.897 million, from the 1.877 million previously reported.
Continuing unemployment claims fell less than expected for the week ended May 30, ticking down to 20.929 million versus the 20 million expected. The prior week’s continuing claims totaled 21.268 million.
6:05 p.m. ET Wednesday: Stock futures open slightly higher
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:05 p.m. ET:
S&P 500 futures (ES=F): 3,186.75, up 0.75 points or 0.02%
Dow futures (YM=F): 26,972.00, up 11 points, or 0.04%
Nasdaq futures (NQ=F): 10,099.75, up 12.5 points, or 0.12%
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