In an emergency move Sunday, the Federal Reserve announced it is dropping its benchmark interest rate to zero and launching a new round of quantitative easing.
The QE program will entail $700 billion worth of asset purchases entailing Treasurys and mortgage-backed securities.
Markets responded negatively, with Dow futures pointing to a drop of 900 points when the market opens Monday morning.
Futures contracts tied to the major U.S. stock indexes fell on Wednesday night after an address from President Donald Trump failed to quell concerns over the possible economic slowdown from the coronavirus.
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The major averages all slid more than 3% on Monday as the number of reported coronavirus cases outside of China rose.
If history is any indication stocks may be set for a relief rally on Tuesday.
According to Bespoke Investment Group, since March 2009 the S&P 500 has fallen more than 2% during a Monday session 18 other times, and that in 15 of the prior instances the index rose the following day, for an average gain of 1.02%.
Microsoft’s primacy and ubiquity in portfolios reflects the way it exemplifies nearly every characteristic that today’s market is rewarding richly.
Microsoft enjoys mid-30s percent profit margins, has repeatedly reloaded a $40 billion buyback plan and pays out more than $15 billion a year in dividends.
Microsoft is among the top 10 holdings in the most hedge funds, according to Goldman Sachs.
But has the acclaim for Microsoft become a bit extreme and uncomfortably unanimous.?
Stocks rose for a third straight day on Wednesday, pushing the S&P 500 back to levels hit prior to the coronavirus scare.
The broad index closed 1.1% higher at 3,334.69, led by strong gains in the energy, financials and health care sectors. That gain drove the S&P 500 to a record closing high. It also erased its losses stemming from fears over the coronavirus and came within a whisker of hitting an all-time intraday high.
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The S&P 500 has dropped 3% from its record high. Economically cyclical groups have been purged. Bonds are leading stock returns one month into the year.
Something was bound to come along and prompt a pullback. As it happened, the viral outbreak arrived to do the job.
Given that a perfectly routine decline following a strong multi-month rally could amount to 2% to 5%, a further drop of 2% to 3% would not compromise the broader uptrend.
Bond markets pricing in a high likelihood of another Fed rate cut around mid-year.
Economists expect growth in the fourth quarter to be about the same as the third quarter, at 2.1%, but growth could fall off going into the new year.
Fourth quarter gross domestic product data is expected Thursday at 8:30 a.m. ET.
Numbers should reflect less growth in spending in the fourth quarter, stubbornly soft business spending, and a surprise widening in the trade gap in December.
The central bank’s Federal Open Market Committee said Wednesday it will hold its benchmark funds rate in a range between 1.5% to 1.75%, where it has been since the latter part of last year.
The committee adjusted the language in its statement to reflect that policy is geared toward “inflation returning to the Committee’s symmetric 2 percent objective.”
The decision was unanimous. Several board members last year objected to the Fed’s rate cuts.
The Davos crowd doesn’t know where to allocate capital, says the vice chairman of British investment company Standard Life Aberdeen.
The current trend is to leave public markets and look to private investments.
Real estate, student accommodation and airports are all examples of what is in favor.
The Washington-based institution forecast in October a global growth rate of 3% for 2019 and of 3.4% for 2020.
The IMF has now revised down those forecasts to 2.9% and 3.3%, respectively.
The IMF is cautious about the state of the global economy going forward, in particular about further trade tensions.
The UK's economy grew by just 0.1% in the three months to November, according to the Office for National Statistics.
Growth was slightly stronger in September and October than previously thought, but fell 0.3% in November, dragging down the three-month figure.
The ONS said growth in the economy year-on-year was at its lowest since the spring of 2012.
Growth in construction was offset by a weakening service sector, while manufacturing was "lacklustre".
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Aerospace and defense stocks typically outperform the S&P 500 in the six months after Middle East crisis events.
Defense stocks have climbed and the broader market has sold off following last week’s killing of Iranian military leader Qasem Soleimani.
Huntington Ingalls and General Dynamics are the two best-performing defense stocks on average following major crisis events.
Stocks fell on Friday after the U.S. confirmed that an airstrike killed Iran’s top military commander, sending oil prices surging and ratcheting up geopolitical concerns.
The Dow Jones Industrial Average closed 233.92 points lower, or 0.6% at 28,634.88 and posted its biggest one-day loss since early December. The S&P 500 also had its worst day in a month, sliding 0.7% to 3,234.85. The Nasdaq Composite dropped 0.8% to 9,020.77. The Dow briefly dropped more than 360 points at the open. The major averages recovered some ground later in the session as oil prices came off their lows.
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Stocks and oil tend to outperform defensive assets like gold and Treasurys in the months after major crisis events in the Middle East, according to an analysis by CNBC.
A U.S. airstrike killed a key Iranian leader, sending oil and gold prices higher.
Major U.S. stock indexes opened lower after the strike.
“All of the pillars of the stock market look a bit shaky to me,” he told “Trading Nation” Thursday. “While the economy will be okay in 2020, I think the stock market will have a rougher go of it.”
While he cites consumer spending, household balance sheets, jobs growth and a housing market as economic bright spots, he also sees slower than expected real GDP growth, a growing federal budget deficit and challenged corporate earnings pressuring the economy.
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Stocks rose to all-time highs on Thursday, led by tech shares, as the strong rally in 2019 continued in the first trading day of the new year.
The Dow Jones Industrial Average advanced 330.36 points, or 0.9% to 28,868.80 and notched its biggest one-day gain since Dec. 6. The S&P 500 closed 0.8% higher —marking its best performance since Dec. 12 — at 3,257.85. The Nasdaq Composite gained 1.3% to end at 9,092.19 and had is best day since Oct. 11. The major averages hit their session highs in the final minutes of trading.
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The pound has risen sharply over the past month as currency traders in the City of London bet that an election victory for Boris Johnson’s Conservatives would lift some of the intense political uncertainty facing Britain. Sterling jumped by more than two cents against the US dollar and the euro after exit polls indicated a Tory majority.
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