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By Nicholas
Jasinski| Thursday, April 21 Yields
vs. Equities. U.S.
stocks had a one-way day today, opening at their session highs then sliding
steadily lower until the close. There was practically nowhere to hide by the
end of the day, with all 11 S&P 500 sectors in the red
and 411 of the index's components closing in negative territory. The S&P 500 as a whole finished down
1.5%, the Dow Jones Industrial Average lost
1%, and the Nasdaq Composite
shed 2.1% on a bad day for growth stocks in particular. The inability to hang on to the morning's
gains was blamed on a busy day of less-than supportive Fedspeak. St.
Louis Federal Reserve
president Jim Bullard, San Francisco's Mary
Daly, and Chicago's Charles
Evans all made hawkish noises in separate remarks
today. But the main event was an afternoon speech
by Jerome Powell
at an International Monetary
Fund event. The Fed chairman as good as confirmed a
half-percentage point interest rate increase early next month. Barron's Megan Cassella
reports: Speaking as part of a panel of top economic
policy officials for a debate on the global economy, Powell said a half-point
interest-rate increase “will be on the table” during the May policy meeting
and noted that many central bank officials already felt such a move was
appropriate during the March meeting. Compared with the central bank’s 2004-2006
tightening cycle, inflation now is higher and yet monetary policy remains
more accommodative, Powell said. “So it is appropriate, in my view, to be
moving a little more quickly,” he continued, though he declined to endorse a
specific path forward and said any decisions will be made at the meeting
itself. “I also think there’s something in the idea of front-end loading
whatever accommodation one thinks is appropriate. So that does—that points in
the direction of 50 basis points being on the table.” Investors are taking Powell at his word.
Bond-market futures pricing now implies a 98% probability of a half-point
increases on May 4, up from about 64% a month ago, according to data from CME
Group. Bond yields jumped on the news, sending the 2-year
U.S. Treasury note yield up 0.12 percentage point, to
2.69%, and the 10-year U.S. Treasury note
yield up 0.08 percentage point, to 2.92%. Both are at their highest yields
since late 2018. That's a source of well-discussed macro pressure on a pricey
stock market. On a more micro level, the first-quarter
earnings parade continued today. Highlights included results from Alcoa,
American
Airlines, AT&T,
AutoNation,
Blackstone,
Boston
Beer, Dow, Philip
Morris, Snap, Union
Pacific, and Xerox. Next up tomorrow morning will be American
Express, Newmont, SAP,
Schlumberger, and Verizon
Communications, to name a few. |
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DJIA: -1.05% to 34,792.76 The Hot Stock: United
Airlines Holdings +9.3% Best Sector: Consumer
Staples -0.1% |
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