US stocks ended mixed on Wednesday, but the S&P 500 eked out a new all-time high nonetheless, closing up 0.1%.
Economic news was also a mixed bag, with the US trade deficit for February soaring to a historic high, and the Federal Reserve’s meeting minutes reiterating that the central bank won’t change its policies for a the foreseeable future.
The Dow closed up 0.1%, or 16 points.
The Nasdaq Composite ended 0.1% lower.
The Federal Reserve released the minutes from its March policy meeting, saying that the economy is not where it needs to be to make some policy changes.
That’s consistent with everything the central bank has been telling us: unemployment is still too high and inflation, in spite of being the boogeyman of the market, is still too low to make big policy changes.
The economic recovery is under way, and while plenty of work remains to be done, stocks are once again hitting record territory. The Dow and the S&P 500 last notched fresh all-time highs on Monday.
“We expected stronger growth,” Nancy Tengler, chief investment officer at Laffer Tengler Investments, which meant to rotate portfolios towards consumer companies and businesses benefitting from discretionary spending.
“Right now we’re seeing stimulus keeping stocks going, and then earnings growth will take over from that,” she told Alison Kosik on the CNN Business digital live show Markets Now.
“This year we’re buying calls against the VIX,” because the volatility index is heading into low territory and could spike higher, Tengler said.
“And we continue to buy puts on the SPY,” the ETF tracking the S&P 500, which would pay off if stocks prices drop in the future, she added.
As for of tech stocks, “I think Amazon (AMZN) is interesting here,” she said, because the company has a robust cloud business and “the winds are at its back in terms of e-commerce.”
As fitness regimes moved into living rooms, home offices and bedrooms during the pandemic, Barry’s Bootcamp studios was forced to shut its doors for a time.
“Given we were left with virtually no support, we had to raise money last year,” said Barry’s CEO Joey Gonzalez.
Barry’s was lucky, but a quarter of gyms in the markets where it has locations will be forced to close, Gonzalez said on the CNN Business digital live show Markets Now.
“Fitness as an industry has gotten no support,” as opposed restaurants or airlines, Gonzalez said. “It seems crazy during a health crisis not to invest in health and wellness. I don’t think this country sees fitness as preventative healthcare.”
As for the future, Barry’s will cater to consumers both in its studios and through online experiences, Gonzalez added.
The Federal Reserve is due to publish the minutes from its latest monetary policy meeting this afternoon and investors are anxiously waiting to learn what was said during the meeting.
Lindsey Piegza, chief economist at Stifel, would love to see some details on the central bank’s exit strategy from its current monetary policy stance. “But we’re unlikely to see that,” she admitted during the CNN Business digital live show Markets Now.
“I think we’ve seen a lot of data that suggest the US economy is on a much stronger trajectory than expected, […] but from the Fed’s perspective they’ve been pretty clear,” Piegza said: The central bank wants to keep its policy where it is while the economy continues to recover.
And any changes to its policies won’t be a surprise either. “The Fed has been very clear that it wants to be as transparent with the market as possible,” Piegza added.
All three major stock indexes are down at midday. In fact it’s a pretty red day across the board.
The Dow is down 0.2%, or 59 points, around lunchtime, while the broader S&P 500 is little changed. The Nasdaq Composite dipped 0.1%.
The 10-year US Treasury bond yield is also down, meaning that bond prices are ticking higher as yields and prices move in opposition to each other. The 10-year bond yielded roughly 1.64% around midday.
Elsewhere, the US dollar index is little changed at 92.3. In the commodities world, US oil futures are down 1.7% at $58.32 per barrel and gold prices are down 0.2% at $1,738 an ounce.
JPMorgan Chase CEO Jamie Dimon says there is reason to be optimistic that the economic recovery from the pandemic will be just right – not too hot and not too cold.
“It is possible that we will have a Goldilocks moment – fast and sustained growth, inflation that moves up gently (but not too much) and interest rates that rise (but not too much),” Dimon wrote in his annual shareholder letter.
A long-lasting economic boom would help America pay down its pile of debt.
And the Fed could more easily exit its emergency programs, Dimon said, because doing so won’t “stop a roaring economy,” even if it causes “a little market turmoil.”
But the JPMorgan boss also warns there is a risk the economy overheats, with surging inflation that forces the Fed to resort to Volcker-style rate hikes that prematurely end the recovery.
“Much of the stimulus may very well hit when the economy is doing quite well,” Dimon said. “I am reminded of when Paul Volcker effectively raised interest rates by 200 basis points on a Saturday night.”
That scenario would raise the cost of US debt and leave the country entering a recession with very high deficits.
US stocks dipped lower at the opening bell in New York Wednesday.
Economic data showed the US trade deficit widened to a historic high of $71 billion in February, and investors are awaiting the Federal Reserve’s latest meeting minutes due in the early afternoon.
The International Monetary Fund suggested Wednesday that some nations should use additional taxes to help recover from the pandemic.
“Countries with robust tax systems may consider levying temporary Covid-19 recovery contributions as supplements to top personal income tax rates,” the organization said in a report.
This could be in the form of temporary personal income tax hikes, or levies on companies’ “excess” profits, to ensure that businesses that are struggling as a result of the pandemic aren’t affected by it.
February wasn’t a great month for America’s trade goals. The nation’s trade deficit jumped to $71.1 billion, the highest level ever recorded, according to the Bureau of Economic Analysis. The trade deficit with China increased to $30.3 billion.
Oof.
It was an increase of 4.8% from January, and more than economists had expected.
“The February weather-hit to US trade was much bigger for exports than imports, hence exacerbating the pattern since the initial lockdowns in early 2020 of imports recovering faster than exports,” said Mike Englund, chief economist at Action Economics, in a note to clients.
The trade deficit for goods was the highest on record at $88 billion, while the services surplus was the lowest since January 2012 at $16.9 billion. Exports fell 2.6% in February, while imports slipped 0.7%.
Jamie Dimon doesn’t think this year’s economic resurgence will be a one-hit wonder.
In his annual letter, the JPMorgan Chase boss said he has “little doubt” that the US economy “will likely boom” for several reasons: excess savings, new stimulus spending, a likely infrastructure package, stimulus from the Federal Reserve and euphoria over the end of the pandemic.
In a phone interview with CNN Business, Dimon said he hasn’t felt this optimistic about the US economy in a “long time.”
“The circumstances are quite good, though some people are still being left behind. And we’re coming out of Covid, thank God,” he said.
A chorus of economists have sharply marked up their growth forecasts in recent months as the rollout of vaccines accelerated and the Biden administration enacted a $1.9 trillion rescue package.
The IMF predicted this week that the US economy will expand this year at the fastest pace since 1984 under President Reagan.
Jamie Dimon is very bullish on the US economic recovery from the pandemic. And yet the JPMorgan Chase CEO is deeply concerned about the future of America.
In his annual shareholder letter Wednesday, Dimon wrote that the Covid-19 pandemic, the “horrific murder” of George Floyd and the painfully slow economic growth of the past two decades are all symptoms of a broader problem: “inept” public policy and broad government dysfunction.
US stock futures attempting a rebound after markets on Tuesday pulled back a bit from their record highs.
Here’s where things stand as of 6:15 am ET:
Samsung (SSNLF) expects to have pulled off a strong first quarter, even as one of its chipmaking facilities was temporarily shut by a brutal US winter storm earlier this year.
The South Korean conglomerate said Wednesday that it likely made about 9.3 trillion Korean won ($8.3 billion) in operating profit from January to March, marking a 44% jump compared to the same period last year.
It also expected sales to have climbed about 17% year-on-year, to approximately 65 trillion Korean won ($58.2 billion). The preliminary results were roughly in line with estimates forecast by analysts polled by data provider Refinitiv.
