A red flag from the Federal Reserve has crept investors a bit, in a week that has delivered milestones for equities.
Global stocks are slipping after the Fed released the minutes of its last policy meeting late on Wednesday. “In summary, the minutes described a weakened economy on an uncertain footing with few viable policy options at the moment,” Michael O’Rourke, chief market strategist at JonesTrading, told clients.
Rumbling investors in particular were of the opinion that the Fed did one option – yield curve control – off the table. Under that policy, the central bank would keep itself busy buying bonds if a specific proceeds were broken into. The idea that the Fed will continue to buy large assets may help shake stock prices, so there appears to be some disappointment this morning.
Or maybe those records are running for the S&P 500 SPX,
and the Nasdaq Composite COMP,
have inspired some to take money off the table. Us call of the day of a team of strategists led by Mark Haefele, chief investment officer for UBS Global Wealth Management, says not to be afraid that about 51% rally for the S&P 500 has been since the post-COVID low in March.
“We see the equity rally as primarily driven by central bank policies of adding unusual liquidity to markets through renewed quantitative easing and ultralow rates,” says Haefele, who expects central banks to remain in stimulus mode for the foreseeable future. ‘- supporting equities and other perceived risky assets. But investors will have to think harder about where to invest.
He expects that the “most attractive returns in the next phase of recovery are in parts of the market that have been left behind so far.” This means that investors with high exposure to stocks that have been driving big gains lately, such as big American technology names – Facebook FB,
Apple AAPL,
Amazon AMZN,
Microsoft MSFT,
Netflix NFLX,
and the mother of the Google alphabet GOOGL,
– wants “rebalance in other opportunities.”
“We see particular benefits for companies involved in 5G and other switching technologies. In addition, as global recovery slowly picks up, the next leg up in the market may be driven by cheaper sectors left behind in the rebound, such as cyclical and value-added, ”Haefele customers say in a note.
And he sees U.S. midcap stocks as “ready to regain lost ground as the economic recovery picks up and expands.” Smaller businesses tend to perform better in a recovery time because they are more agile.
See the measure of midcap performance, trust the SPDR S&P 500 ETF SPY,
is up 4.7% so far against a 6% drop for the SPDR S&P Midcap-400 ETF Trust MDY,
As ETF.com reports, midcap files are leading a market recovery after the 1997 Asian financial crisis, the 2000 dot-com bubble, and the 2008-09 financial crisis.
The brand
Dow YM00,
S&P ES00,
and Nasdaq NQ00,
futures are under pressure, with losses for European SXXP,
and Asian markets. Gold GC00,
glide and the dollar DXY,
up.
The map
Time to love Europe less?
The buzz
Weekly unemployment claims are ahead and economists are looking for another decline. The Philadelphia Federal Reserve’s manufacturing index and leading economic indicators are also emerging.
Shares of China’s e-commerce giant Alibaba
BABA,
have driven to results.
Shares of Intel INTC,
climb after the chipmaker announced plans for a full stock sale. Shares of rival Nvidia slipped even to record earnings.
Unfathomable a few months ago, home rental company Airbnb planned a first public offering.
Makeup giant Estee Lauder EL,
will dismiss up to 2,000 after posting a loss.
A China official says recently postponed trade talks are back on track.
First Chamber member Kamala Harris accepted the nomination of the Democratic Party for Vice President at the Virtual Convention, where former President Barack Obama took over the current administration.
Random reads
Russian opposition leader Alexei Navalny is in a coma after drinking suspected poisoned tea.
Germany strikes at lazy dog owners.
Central banks are here to make you happy. Mission accomplished.
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