· Wall Street down on flight from techs; move to value limits loss on Dow, S&P 500
Wall Street’s major indexes lost ground on Tuesday as investors moved out of market-leading growth stocks, though a rotation into cyclical value stocks indicated hopes of economic revival as states began to relax restrictions enacted to fight the deadly COVID-19 pandemic
The Dow Jones Industrial Average .DJI fell 32.23 points, or 0.13%, to 24,101.55, the S&P 500 .SPX lost 15.09 points, or 0.52%, to 2,863.39 and the Nasdaq Composite .IXIC dropped 122.43 points, or 1.4%, to 8,607.73.
First-quarter earnings season has shifted into high gear, with S&P 500 earnings now expected to be down 14.8% from a year ago, a dramatic U-turn from the 6.3% year-on-year growth seen on Jan. 1, according to Refinitiv data.
The U.S. Federal Reserve convenes its two-day monetary policy meeting to contend with crushing joblessness and an ailing economy.
Consumer confidence plunged in April, with the ‘current conditions’ component suffering its largest drop ever, according to the Conference Board.
· Dow futures fall slightly ahead of Fed decision
Stock futures fell slightly in overnight trading on Tuesday as investors eyed guidance from the Federal Reserve on the future path of interest rates with a gradual reopening of the economy in sight.
Futures on the Dow Jones Industrial Average dipped about 60 point, while the S&P 500 futures were marginally lower. The Nasdaq futures rose slightly after big tech shares underperfomed in the previous session.
All eyes will be on the Fed’s monetary policy decision at 2 p.m. ET Wednesday. Investors will look to the central bank’s statement and chairman Jerome Powell’s virtual press conference for clues about how long interest rates will stay near zero as the economy seeks to emerge from coronarivirus crisis.
“It doesn’t look like the Fed will raise interest rates beyond 0% until well-past the pandemic, which we think might be around 2023,” said Jim Caron, head of global macro strategies at Morgan Stanley Investment Management. “The market is pricing a recovery that starts in Q3, but there’s wide variability, and we need the Fed to give its input.”
While no one is expecting any change to its benchmark interest rate, the Fed could potentially adjust the rate on bank reserves and announce asset purchases targeted toward driving down longer-term rates.
Another big market catalyst on Wednesday will be a reading on real gross domestic product at 8:30 a.m. ET. Economists surveyed by Dow Jones forecast the U.S. economy shrank by 3.5% in the first quarter as the pandemic disrupted economic activities. U.S. GDP grew by 2.1% in the fourth quarter.
· European stocks close higher with earnings and lockdown easing in focus; Wirecard down 26%
European markets closed higher higher Tuesday as investors reacted to volatility in oil markets and a host of corporate earnings.
The pan-European Stoxx 600 provisionally closed about 1.5% higher, with bank stocks jumping 4.6% to lead gains as most sectors and all the major bourses traded in positive territory.
· NYSE to reopen San Francisco-based options floor next Monday
The New York Stock Exchange said on Tuesday its NYSE Arca Options trading floor in San Francisco would partially reopen next Monday but its New York-based trading floors would remain closed for now, having been shut since March 23 due to the coronavirus crisis.
· Asia Pacific stocks up as investors await Fed rate decision; Samsung Electronics earnings miss expectations
Stocks in Asia Pacific rose in morning trade as investors await the U.S. Federal Reserve’s decision on interest rates, expected later on Wednesday stateside.
South Korea’s Kospi gained 0.12% in early trade. Over in Australia, the S&P/ASX 200 rose 0.4% as shares of major banks such as Commonwealth Bank of Australia and Westpac advanced.
Overall, the MSCI Asia ex-Japan index traded 0.21% higher.
On the corporate earnings front, South Korea’s Samsung Electronics posted a first quarter net profit of 4.9 trillion Korean won (approx. $4.01 billion), Reuters reported Wednesday. Still, that was below Refinitiv estimates of 5.1 trillion won.
Markets in Japan are closed on Wednesday for a holiday.
Reference: CNBC, Reuters
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