Mixed close on US markets as Fed maintains “transitory” inflation narrative
01:55, 29 July 2021
US markets were mixed on Wednesday after the US Federal Reserve signalled an accommodative stance for the near term, saying that the sectors most adversely affected by the pandemic have not fully recovered and accelerating inflation was due to “transitory factors”.
The Federal Reserve said the path of economic recovery depended on the course of the virus and that it is committed to use its full range of tools to achieve maximum employment and inflation at the rate of 2% over the longer run.
At a news conference, Fed chair Jerome Powell said the central bank has begun discussing plans to reduce its bond purchases.
Quantitative easing tapering expected soon
“We expect the Jackson Hole Federal Reserve Conference to show Fed officials laying the groundwork for a QE (quantitative easing) taper with this fleshed out in more detail at the September FOMC meeting before being formally announced in December,” ING said in a note.
The yield on 10-year US Treasury notes inched lower to 1.23%, while the US Dollar Index remained unchanged at 92.288.
“The fall in 10Y yields from 1.7% to 1.25% is a big additional monetary stimulus for the US economy and is only likely to add to the nervousness of the more hawkish members of the FOMC,” ING added.
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Mixed markets
The tech-heavy Nasdaq Composite Index rose 0.7% to 14,762.58 points, the blue-chip Dow Jones Industrial Average Index closed 0.4% lower at 34,930.93 points and the broader S&P 500 Index remained flat at 4,400.64 points on Wednesday.
Gains in Pfizer, Boeing and Ford Motor, all of which announced results on Wednesday, helped offset losses among firms like Apple, Microsoft and Starbucks, that had released quarterly results earlier this week.
Apple shares fell 1.2% to $144.98 and were the second most heavily traded stock on the S&P 500 Index, while Starbucks and Microsoft fell 2.9% and 0.1%, respectively.
Boeing, Pfizer, Ford Motor results
Boeing shares were among the biggest percentage gainers on Wednesday after the company reported its first profitable quarter since 2019. Shares of the aircraft manufacturer rose 4.2% to $231.57.
Pfizer stock rose 3.2% to $43.45 after the company reported that quarterly revenues nearly doubled from a year ago. The vaccine maker raised its full year revenue guidance as more people are inoculated against the deadly COVID-19 virus.
Ford Motor closed higher on Wednesday after the automaker raised its full year adjusted earnings before interest and tax and adjusted free cash flow.
Facebook signals slower growth
Facebook shares ended the day higher but traded 3.5% lower in after-market trade on Wednesday, after the social media giant signalled slower growth for the second half of 2021.
McDonald’s fell 1.9% to $241.78 on Wednesday despite reporting a 40.5% growth in global comparable sales in the second quarter, helped by its collaboration with South Korean boy band BTS. The company added that the said growth increased 6.9% on a two-year basis.
Meme stocks AMC Entertainment Holdings and GameStop were trading at opposite ends on Wednesday with the former closing 2.4% higher and the later losing 5.3%.
Crypto muted
Cryptocurrencies remained subdued on Thursday morning with bitcoin inching up 0.6% in the last 24 hours to stay below the $40,000 mark and alt-coin ether losing 0.7% to $2,286.63