Federal Reserve Chair Jerome Powell gave investors reason for pause on Wednesday afternoon in a modestly lower day for stocks.
The Fed itself, following its latest two-day policy meeting, announced it would keep its benchmark rate near zero, stating that "indicators of economic activity and employment have strengthened" amid policy support and progress on COVID vaccinations.
"With no meaningful change to monetary policy or communication, this meeting was simply a message to market participants to sit back and observe as the economic recovery continues to unfold," says Charlie Ripley, senior investment strategist for Allianz Investment Management.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But Powell managed to get traders to zigzag a bit in his ensuing press conference.
Investors cheered after he said it could be "some time" before the economy hits its targets, and that the Fed is "not thinking about thinking about tapering" (emphasis ours). But those quick gains reversed after Powell dropped an F-bomb – "froth" – when describing U.S. equity markets.
All the major indices lost ground by the closing bell. The Dow Jones Industrial Average dropped 0.5% to 33,820, weighed down by Amgen (AMGN, -7.2%) and Boeing (BA, -2.9%), which both reeled in the wake of disappointing earnings reports. The S&P 500 (off marginally to 4,183) and Nasdaq Composite (-0.3% to 14,051) also finished in the red.
Other action in the stock market today:
- Visa (V, +1.6%) was one of the Dow's best performers. The payments giant reported stronger-than-expected fiscal second-quarter earnings and revenue, and said payments volume jumped 11% over the three-month period.
- F5 Networks (FFIV, -9.1%) took a notable dive after the tech name last night reported earnings. For its fiscal second quarter, FFIV beat on both the top and bottom line, but the company's guidance for the current quarter came in below estimates.
- The small-cap Russell 2000 actually finished in the black, gaining 0.1% to 2,304.
- U.S. crude oil futures jumped 1.5% to settle at $63.86 per barrel. Boosting prices to their highest finish in six weeks was data that showed a smaller-than-anticipated weekly rise in domestic crude inventories and a commitment from OPEC+ to continue easing back on oil production.
- Gold futures slipped 0.3% to $1,773 an ounce.
- The CBOE Volatility Index (VIX) declined 1.2% to 17.35.
- Bitcoin prices improved by 1.2% to $55,470. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
Run, Economy, Run!
Powell might keep Wall Street guessing, but economic improvement seems a settled matter.
In addition to the Fed's nod of confidence, Barclays economists on Wednesday upwardly revised their official Q1 GDP growth forecasts by half a percentage point to 5.5% – aligning it with Kiplinger economists' expectations.
"At the time of our previous Q1 GDP forecast revision (see US GDP Tracking , April 16, 2021), we were still missing some key source data for private inventory investment and international trade," say Barclays economists. "We had viewed risks to those forecasts as being to the downside and refrained from fully reconciling our official forecast with the tracking estimates until these components were informed by hard data.
"With the March estimates in hand, we now fully reconcile our official forecast with the tracking estimate."
Largely speaking, this continues to augur well for the prospects of so-called "recovery stocks," barring any exogenic shocks. Yes, that's bound to be a boon for restaurants, airlines, cruise lines and other consumer-facing businesses. But if it powers a vehicle or helps get something built, chances are its fortunes could continue to improve, too.
Take these five commodity picks, for instance, that include a wide range of mining and even forestry opportunities.
Oil stocks should be on the menu, too. U.S. crude oil has shot up by more than 30% year-to-date, translating to much more profitable operations for a host of energy plays that have spent years slimming down operations amid far leaner prices. These seven plays in particular have managed to attract a horde of bullish calls of late.
Kyle Woodley was long BA as of this writing.
-
New $6,000 'Senior Bonus' Deduction: What It Means for Taxpayers Over Age 65Tax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
-
Walmart Plus Members Will Soon Have Their Choice Between Two Streaming ServicesDiscover which streaming service is coming to the platform.
-
If You'd Put $1,000 Into Sherwin-Williams Stock 20 Years Ago, Here's What You'd Have TodaySherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
If You'd Put $1,000 Into UnitedHealth Group Stock 20 Years Ago, Here's What You'd Have TodayUNH stock was a massive market beater for ages — until it wasn't.
-
President Trump Makes Markets Move Again: Stock Market TodayThe White House is moving ahead with plans to reshape the Federal Reserve and to buy shares in more sectors and stocks.
-
Stocks Are Up and Down on Fed Day: Stock Market TodayIn another sign of changing times, JPMorgan has partnered with Coinbase to enable cryptocurrency purchases with credit cards.
-
If You'd Put $1,000 Into Berkshire Hathaway Stock 20 Years Ago, Here's What You'd Have TodayBerkshire Hathaway is a long-time market beater, but the easy money in BRK.B has already been made.
-
If You'd Put $1,000 Into Procter & Gamble Stock 20 Years Ago, Here's What You'd Have TodayProcter & Gamble stock is a dependable dividend grower, but a disappointing long-term holding.
-
The Best Aerospace and Defense ETFs to BuyThe best aerospace and defense ETFs can help investors capitalize on higher government defense spending or hedge against the potential of a large-scale conflict.
-
Stock Market Today: Another Quarter, More Mixed Price Action"Up and to the right" remains the general trend despite persistent uncertainty around critical policy issues.
