Wall Street On The Verge of Wiping Out All 2021 Gains
Wall Street was rocked today by disappointing comments made by Federal Reserve Chairman Jerome Powell.
Wall Street’s major indices took a beating during Thursday’s trading session. At one point, the three main U.S. equity benchmarks had fallen enough that they were all close to erasing their year-to-date gains.
- The Dow Jones Industrial Average was down nearly 700 points, or 2.2%, lower pushing the index to a decline of 0.1% for 2021
- The S&P 500 index was off 2.5% on the session, erasing its gains for the year and pushing the broad-market benchmark to a decline of 0.8% for 2021.
- The Nasdaq Composite Index was teetering on the brink of its first correction, down 10% from a recent peak since Sept. 9. The NASDAQ was off 3.3% and literally down 2.5% for the year to date.
While speaking at a webinar hosted by the Wall Street Journal, Chairman Powell’s comments on the central bank’s current policy stance and why it’s appropriate suggesting moves in inflation are transitory; disappointed investors who had hoped he would say more about how the Fed would react to tamp down a rise in long-term bond yields.
Powell’s avoidance of this issue is likely based on his fundamental belief that telegraphing an attempt to manipulate, control or influence the bond market could have dangerous unforeseen consequences.
Wall Street should be much more optimistic now that the Johnson and Johnson (NYSE: JNJ) one-shot vaccination shot has been approved by the FDA for emergency use, and there will be enough vaccines to administer to every adult in the United States by the end of May. Throw in the increasing likelihood of passage of the $1.9T Covid Relief Bill and the stimulative effect it will have on the U.S. economy and we should see stocks rally. Instead, their heading south and oil, which fluctuates on demand, keep rising on the weakness of the U.S. dollar and the belief that the Biden Administration will reduce oil production in the United States over environmental concerns.
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