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Wall Street opens higher after surging Chinese markets

A currency trader walks near the screen showing the Korea Composite Stock Price Index (KOSPI) at a foreign exchange trading floor in Seoul, South Korea, Wednesday, March 16, 2022. Asian stocks rose on Wednesday as investors awaited a widely expected decision from the United States.  Federal Reserve on interest rate policy.  (AP Photo/Lee ​​Jin-man)

A currency trader walks near the screen showing the Korea Composite Stock Price Index (KOSPI) at a foreign exchange trading floor in Seoul, South Korea, Wednesday, March 16, 2022. Asian stocks rose on Wednesday as investors awaited a widely expected decision from the United States. Federal Reserve on interest rate policy. (AP Photo/Lee ​​Jin-man)

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Wall Street adds to its gains early Wednesday as markets begin to gather hope that there may be better news on the horizon on inflation, the war in Ukraine and other worries that have unsettled investors . The S&P 500 rose 1.5% and the Nasdaq 1.7%. Chinese markets soared overnight after Beijing promised to help that country’s ailing real estate sector and its internet companies. Ukraine’s president made a direct appeal for help to US lawmakers in a speech. Later today, the Federal Reserve is expected to raise interest rates for the first time since 2018.

THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.

NEW YORK (AP) — U.S. markets are poised to follow global stocks higher on Wednesday after Chinese leaders pledged increased support for a slowing Chinese economy, as investors awaited the outcome of a Federal Reserve meeting.

Dow Jones industrial futures rose 1.2% and S&P 500 futures gained 1.3% after Hong Kong’s benchmark jumped 9% overnight .

A variety of factors contributed to the latest rally, including comments from Ukrainian President Volodymyr Zelenskyy suggesting there was still reason to be optimistic the talks could still yield a deal with the Russian government.

Yet Russia stepped up its bombardment of the Ukrainian capital and launched new assaults on the port city of Mariupol, making bloody advances on the ground on Wednesday as Zelenskyy prepared to issue a direct appeal for more help in a rare speech by a foreign leader in the United States. Congress.

France’s CAC 40 jumped 3.5%, while Germany’s DAX gained 3.2% and Britain’s FTSE 100 rose 1.4%.

At its policy meeting later on Wednesday, the Fed is expected to raise its short-term policy rate by 0.25 percentage points. This would be the first increase since 2018, pulling it off its all-time high of near zero, and likely the start of a series of increases.

The Fed is trying to slow the economy enough to stem the high inflation that is sweeping the country while avoiding triggering a recession.

Inflation is already at its highest level in generations, and the most recent figures do not include the spike in oil prices after Russia invaded Ukraine. The move comes as central banks around the world prepare to end support for the global economy following the outbreak of the pandemic.

“The reference to ‘rearranging deck chairs on the Titanic’ is not meant to invoke despair. Rather, it is meant to convey a sense of the inevitability of the upcoming Fed tightening cycle,” said Tan Boon Heng of Mizuho Bank in Singapore.

The surge in Hong Kong’s Hang Seng index was a respite from recent selloffs by Chinese tech companies and other pressures that had taken it to six-year lows.

At a Cabinet meeting on Wednesday, officials promised to “reinvigorate the economy” with “support measures” for struggling real estate and other measures, the official Xinhua news agency reported.

At a meeting led by Vice Premier Liu He, President Xi Jinping’s top economic adviser, Cabinet officials called on government agencies to release other “market-friendly” policies, Xinhua said.

He also said talks between Chinese and U.S. regulators on resolving a dispute over rules governing foreign companies listed on U.S. markets had progressed.

The Hang Seng gained 9.1% to 20,087.50. The Shanghai Composite Index added 3.5% to 3,170.71.

Shares of e-commerce giant Alibaba Group Holding jumped 23.6%. Tencent Holdings, operator of popular messaging service WeChat, jumped 23% and live streaming site Kuaishou Technology added 31.4%.

Japan’s benchmark Nikkei 225 rose 1.6% to end at 25,762.01. Australia’s S&P/ASX 200 gained 1.1% to 7,175.20. The South Korean Kospi gained 1.4% to 2,659.23.

Renewed concerns about COVID-19 in some regions along with a long list of other concerns have caused wild hour-to-hour swings in the markets over the past few weeks. The war in Ukraine has pushed up the prices of oil, wheat and other commodities that the region produces. This increases the threat that already high inflation will persist and combine with a potentially stagnant economy.

Benchmark U.S. crude rose 49 cents to $96.93 a barrel in electronic trading on the New York Mercantile Exchange.

A barrel of US crude fell 6.4% to $96.44 on Tuesday. It had briefly topped $130 last week when concerns about supply disruptions due to the war in Ukraine were at their height.

Brent crude, the international price standard, rose 11 cents to $100.02 a barrel.

In other developments, nickel trading was halted again on the London Metal Exchange on Wednesday after briefly recovering from a week-long suspension when the price of the metal soared to over $100,000 a day. tonne. The exchange said it was investigating a “system error” that resulted in a few trades being made below the lower price limit introduced to curb volatility.

Russia is the world’s third largest producer of nickel. Its price and that of many other commodities rose on speculation of possible supply disruptions as Russia faces widening economic sanctions following its invasion of Ukraine.

In currency trading, the US dollar stood at 118.29 Japanese yen, little changed from 118.31 yen. The Euro traded at $1.1002, down from $1.0955 previously.

Starbucks shares rose more than 5% in premarket trading after chairman and chief executive Kevin Johnson announced he would retire next month. The company’s former CEO and founder, Howard Schultz, will replace him on an interim basis.

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AP Business Writer Joe McDonald in Beijing contributed.

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The fallout on the market from the war in Ukraine combines the risks of past crises

The writer is president of Queens’ College, Cambridge and an advisor to Allianz and Gramercy.

Due to the invasion of Ukraine, Russia is disconnected from the world system, one economic and financial thread after another.

It will devastate the economy, once the 11th in the world and still a member of the G20. Combined with a crippled financial system, it will lead to a depression that will compromise the well-being of generations of Russians.

What is happening economically and financially in Russia and Ukraine will not stay there. Besides the tragic forced migration of millions of Ukrainians, there are consequences for the global economy and markets, both immediate and longer term.

When the fallout and fallout has made its way around the world, we will have faced some of the most difficult economic and financial challenges of the 1970s, 1980s and 1990s. But there is an important difference: they will all have materialized. at the same time.

Russia’s vulnerability to Western sanctions is visible in the collapse of its currency, queues outside banks, shortages of goods, increasing financial restrictions, etc. The resulting sharp contraction in gross domestic product will take years to reverse and will require a costly transformation of the way the economy works internally and interacts with the outside.

The main implications for the rest of the world, although uneven from country to country and within countries, are a combination of challenges we have seen before.

Due to disruptions in the availability of raw materials from Ukraine and Russia, as well as further disruptions in the supply chain, the world is facing high cost inflation reminiscent of the oil shock of the 1970s.

Also similar to the 1970s, the US Federal Reserve, the world’s most powerful central bank, is already facing self-inflicted damage to its inflation-fighting credibility. This comes with the likelihood of unanchored inflation expectations, the absence of good monetary policy options, and a stark choice for the Fed between allowing above-target inflation through 2023 or pushing the economy. in the recession.

As in the 1980s, rising payment arrears will be a feature of emerging markets. It will start with Russia and Ukraine, although for different reasons.

Increasingly, Russia will be both unwilling and unable to pay Western bondholders, banks and suppliers. In contrast, Ukraine will attract considerable international financial assistance, but this will increasingly be conditional on the private sector sharing some of the financial burden by agreeing to a reduction in contractual claims on the public sector of the country.

This mix of default and restructuring is likely to spread to other emerging economies, including some particularly fragile commodity importers in Africa, Asia and Latin America. They are already feeling the pain of high import prices, a stronger dollar and higher borrowing costs.

As in the 1990s, when a surge in market returns took many by surprise, we should also expect greater volatility in financial markets.

Investors are slowly recognizing that the buy-the-dip investment strategy has been undermined. This approach has proven to be very profitable when supported by massive and predictable liquidity injections by central banks. But he now faces headwinds as U.S. monetary policymakers lack good policy alternatives. This occurs when the price of many assets is significantly decoupled from fundamentals by many years of central bank interventions.

Unlike the 1990s, however, investors should not expect a rapid normalization of Russia’s relations with international capital markets and, with that, a recovery in its debt securities. This time will be more complicated and longer.

All of this has three main implications for the global economy. Stagflation has moved from a risky scenario to a reference scenario. Recession is now the risky scenario. And there will be significant dispersion in individual benchmark results, ranging from a depression in Russia to a recession in the Eurozone and stagflation in the United States.

While the differentiation will also be visible in market performance, this will come after a period of contagion for some as global financial conditions tighten. The major risk scenario for the markets has also changed – potentially with unsettling volatility and market dysfunction.

This is a risk which, unlike 2008-09, concerns less the banks and, consequently, the payment and settlement system. That’s the good news. But its transformation and migration to the non-banking sector still presents risks of backfire for the real economy.

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Stocks fall as war overshadows ‘fantastic’ US jobs data

NEW YORK (AP) — Stocks around the world tumble on Friday as not even a gangbuster report on the U.S. labor market can distract Wall Street from its concerns about the war in Ukraine.

The S&P 500 was down 1.7% in morning trade, on higher losses in Europe after a fire at the continent’s largest nuclear power plant caused by bombings raised concerns over the aftermath. . Markets around the world have swung sharply over the past week on concerns about the price swings for oil, wheat and other commodities produced in the region due to the Russian invasion, which which exacerbated the already high inflation in the world.

Treasury yields fell again as investors shifted money into US government bonds in search of safety, and some jitters on Wall Street grew.

All the moves came despite a much stronger-than-expected US jobs report by economists, described as encouraging and even “fantastic”. Hirings by employers last month exceeded expectations by hundreds of thousands of workers, more people returned to the labor market after sitting on the sidelines and employment figures for previous months were revised on the rise.

On the inflation front, worker wage growth was slower last month than economists expected. While this is daunting for workers hoping to keep up with rising grocery prices, for economists and investors it means less risk of the economy heading into what is known as a “wage-wage spiral”. price”. In such a strengthening cycle, higher wages for workers would induce firms to raise their own prices even further.

“The COVID recovery was in full swing in the jobs report,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments.


“The tricky part is the future, not the past,” he said, as crude oil prices rallied above $112 a barrel amid concerns about pressure on oil supplies. because of the Ukrainian war. “Higher fuel and food costs can eat into consumers’ budgets. These high costs can be a boon for oil producers and farmers, but not for everyone. »

Those concerns helped push the Dow Jones Industrial Average down 519 points, or 1.5%, to 33,275 as of 11:05 a.m. EST. The Nasdaq composite was 2.1% lower.

The losses were widespread, with more than 80% of S&P 500 stocks down. Among the few winners were Chevron, Exxon Mobil and other companies that can benefit from higher oil prices. The S&P 500 is on course for its third weekly loss in the past four, and it’s down just over 10% from its all-time high set earlier this year.

In Europe, whose economy is much more closely tied to the conflict due to its dependence on the region’s oil and natural gas, the losses were greater. The French CAC 40 fell 4.2% on Friday, the German DAX lost 3.8% and the FTSE 100 in London fell 2.7%.

Russian forces gained ground, bombing Europe’s largest nuclear power plant and setting a fire early on Friday as they continued their attack on a crucial Ukrainian energy-producing city. But authorities said the fire was safely extinguished. US Energy Secretary Jennifer Granholm tweeted that the reactors at the Zaporizhzhia plant were protected by strong containment structures and were shut down safely.

Trading on the Moscow Stock Exchange, after briefly opening on Monday, remained closed throughout the week. The value of the Russian ruble continues to hover below one penny after plunging about 30% since the middle of last week. It now takes about 104 rubles to get a dollar, compared to less than 75 at the start of the year. The ruble fell as Western governments imposed sanctions that cut off much of Russia’s access to the global financial system.

The price of US oil rose 3.9% to $111.89 a barrel. Brent, the international standard, climbed 4% to $114.93 a barrel.

Amid the rush to safety, the 10-year Treasury yield fell to 1.70% from 1.84% on Thursday night, a big step. It is well below the 2% level it reached last month as expectations of upcoming interest rate hikes by the Federal Reserve to curb inflation were set.

Stocks rallied mid-week after Federal Reserve Chairman Jerome Powell said he favored a more modest increase in interest rates later this month than some investors did. had feared. The Fed is set to hike rates for the first time since 2018, though it has a tightrope walk ahead of it as rates that are too high can choke the economy and trigger a recession.

Powell warned on Thursday that the fighting in Ukraine is likely to further amplify the high inflation that is troubling global economies. Russia is a major oil producer and prices have risen as global supplies are threatened by the conflict.

“For a world that was already struggling with worrying (cost-push) inflation before the invasion of Ukraine, soaring commodity prices due to geopolitical fallout are not just an inconvenience, but rather a threat. constraining economy,” Mizuho Bank said in a comment.

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AP Business Writer Elaine Kurtenbach contributed.

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Wall Street losses rise amid simmering Ukraine crisis

In this photo provided by the New York Stock Exchange, pundit Stephen Naughton works at his post on the trading floor, Tuesday, Feb. 22, 2022. Stocks swung between small gains and losses in morning trading on Wall Street on Tuesday as that tensions escalated in Ukraine during Russia's decision to send forces to the eastern regions of that country.  (Allie Joseph/NYSE via AP)

In this photo provided by the New York Stock Exchange, pundit Stephen Naughton works at his post on the trading floor, Tuesday, Feb. 22, 2022. Stocks swung between small gains and losses in morning trading on Wall Street on Tuesday as that tensions escalated in Ukraine during Russia’s decision to send forces to the eastern regions of that country. (Allie Joseph/NYSE via AP)

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Wall Street losses rose on Wednesday as world leaders waited to see if Russian President Vladimir Putin ordered troops deeper into Ukraine.

The S&P 500 fell 1.8% to an 8-month low, deepening the benchmark’s “correction” to a 10% loss from its recent high. More than 85% of S&P 500 stocks fell as technology companies weighed on the market. index the most.

The tech-heavy Nasdaq fell 2.6%, dragged down by steep losses from Apple and Microsoft. The Dow Jones Industrial Average fell 1.4%.

US Treasury yields rose slightly, as did gold prices.

Wall Street has been watching developments in Ukraine closely, where Russia has been amassing troops for a potential new invasion. Russia has started to evacuate its embassy in Kyiv. He has already sent soldiers to the eastern regions of Ukraine after recognizing the independence of some rebel-held areas.

The United States and Western countries responded with sanctions, and Germany withdrew a document needed to certify Russia’s Nord Stream 2 gas pipeline.

Energy prices have been volatile – Russia is the world’s largest natural gas producer and the third largest oil producer and a military conflict could threaten supplies.

Geopolitical tensions added to investor concerns about rising interest rates. The Federal Reserve is expected to raise interest rates at its next policy meeting in March. In anticipation of higher rates, investors had pulled money out of growth sectors such as technology stocks. The Russian-Ukrainian crisis has exacerbated this tendency to abandon riskier assets.

The latest losses added to Tuesday’s slump and the S&P 500’s slide toward a correction. The index saw its last correction in the spring of 2020, as the pandemic upended the global economy. That correction deepened into a bear market — a decline of 20% or more — as the S&P 500 fell nearly 34% in about a month.

“We are clearly, solidly in corrective territory at this point,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “We need some kind of positive news, and there really isn’t much right now.”

The S&P 500 fell 79.26 points to 4,225.50. It is now 11.9% lower than the record level reached on January 3. Shares of some of the largest companies in the index have been hammered by the market slump since the start of the year. Meta, the parent company of Facebook, is down 41.4%, Tesla is down 36.3% and Microsoft is down 16.3%, while Alphabet, the parent company of Apple and Google, is down 12.9%.

Tech stocks led Wednesday’s wide losses. Microsoft and Apple fell 2.6%. The sector has an outsized influence on the S&P 500 due to high valuations of Big Tech companies.

The Dow Jones lost 464.85 points to 33,131.76, while the Nasdaq slipped 344.03 points to 13,037.49. The index is now 18.8% below its peak in November 2021.

Small company stocks also lost ground. The Russell 2000 Index fell 36.08 points, or 1.8%, to 1,944.09.

Retailers and other businesses that rely on direct consumer spending also weighed on the market. Amazon fell 3.6% and Starbucks 3.7%.

US crude oil prices remained volatile, slipping 0.3%, although energy stocks gained ground. Chevron rose 2.4%.

Bond yields rose slightly. The 10-year Treasury yield rose from 1.95% to 1.98% on Tuesday evening.

Wall Street also looks at how companies are handling supply chain issues and higher costs in their latest series of corporate bulletins.

Lowe’s rose 0.2% after raising its profit forecast for the year following a strong financial report in the fourth quarter. Security software maker Palo Alto Networks rose 0.4% after raising its profit forecast on strong cybersecurity demand.

TJX, the parent company of TJ Maxx and Marshalls, fell 4.2% after reporting disappointing fourth-quarter financial results.

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Veiga reported from Los Angeles.

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Stocks and yields fall as swings rattle Wall Street again

A currency trader watches monitors in the <a class=foreign exchange trading room at the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Feb. 11, 2022. Shares were mostly down on Friday in Asia after selling off at Wall Street boosted by news that US inflation jumped 7.5% in January, raising expectations that the Federal Reserve will need to act forcefully to cool the economy by raising interest rates ‘interest. (AP Photo/Ahn Young-joon)” title=”A currency trader watches monitors in the foreign exchange trading room at the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Feb. 11, 2022. Shares were mostly down on Friday in Asia after selling off at Wall Street boosted by news that US inflation jumped 7.5% in January, raising expectations that the Federal Reserve will need to act forcefully to cool the economy by raising interest rates ‘interest. (AP Photo/Ahn Young-joon)” loading=”lazy”/>

A currency trader watches monitors in the foreign exchange trading room at the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Feb. 11, 2022. Shares were mostly down on Friday in Asia after selling off at Wall Street boosted by news that US inflation jumped 7.5% in January, raising expectations that the Federal Reserve will need to act forcefully to cool the economy by raising interest rates ‘interest. (AP Photo/Ahn Young-joon)

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Treasury stocks and yields are down sharply on Wall Street on Friday, as growing worries about an impending Russian invasion of Ukraine add to already elevated market worries about inflation and interest rates.

The S&P 500 was down 1.6% in afternoon trading after the White House encouraged all US citizens to leave Ukraine in the next 24-48 hours ahead of a possible invasion by the Russia.

The shares suddenly fell around 1:30 p.m. Eastern Time, with losses nearly tripling in about half an hour.

At the same time, Treasury yields fell as investors shifted money into bonds in search of safe havens. The 10-year Treasury yield fell to 1.97% from around 2.03% earlier in the afternoon.

Crude oil prices also rose suddenly on fears that the violence could eventually lead to supply disruptions. Brent crude, the international standard, rose 3.4% to $94.55 a barrel, while U.S. crude rose 3.5% to $93.07 a barrel.

For stocks, this is just the latest decline in what has been a tumultuous run. They have fallen since peaking at the start of this year amid fears the Federal Reserve will need to become more aggressive in raising interest rates to contain inflation.

But it’s a sharp turnaround for bonds, which have been steadily rising on expectations that the Fed will raise rates more often and more sharply this year than expected. Just a day earlier, the 10-year Treasury yield topped 2% for the first time since 2019.

In other stock trading, the Dow Jones Industrial Average fell 294 points, or 0.8%, to 34,947 as of 2:18 p.m. Eastern. The Nasdaq fell 2%.

Inflation has been steadily rising over the past year as the economy recovers from the virus pandemic and demand for goods far exceeds supply. The Labor Department said consumer-level prices rose 7.5% last month from a year earlier, which is the highest inflation reading since 1982.

The broader market had gained ground earlier in the week, but the latest inflation report sparked a wave of selling that erased most of the week’s gains. Investors are worried about the impact of the Federal Reserve’s plan to raise interest rates to fight rising inflation. Such moves to raise interest rates could curb inflation, but they would also put downward pressure on all kinds of investments.

Markets will likely remain volatile as the Fed nears a rate hike and investors gauge the impact.

“What we’re going through is likely to continue in the near term,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

Other economies are also feeling the heat from sharp price increases, with some central banks having already decided to raise interest rates. Others abstain. The central banks of Thailand, Indonesia and India chose this week to keep their key rates unchanged.

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Stocks mixed, yields soar as jobs data boosts rate outlook

A currency trader looks at monitors in front of screens showing the Korea Composite Stock Price Index (KOSPI), left, and the exchange rate between the US dollar and South Korean won in the <a class=foreign exchange trading room of the headquarters of KEB Hana Bank in Seoul, South Korea, Friday, Feb. 4, 2022. Asian stocks were mixed on Friday after a historic drop in the share price of parent Facebook’s stock helped lower d other tech stocks on Wall Street. (AP Photo/Ahn Young-joon)” title=”A currency trader looks at monitors in front of screens showing the Korea Composite Stock Price Index (KOSPI), left, and the exchange rate between the US dollar and South Korean won in the foreign exchange trading room of the headquarters of KEB Hana Bank in Seoul, South Korea, Friday, Feb. 4, 2022. Asian stocks were mixed on Friday after a historic drop in the share price of parent Facebook’s stock helped lower d other tech stocks on Wall Street. (AP Photo/Ahn Young-joon)” loading=”lazy”/>

A currency trader looks at monitors in front of screens showing the Korea Composite Stock Price Index (KOSPI), left, and the exchange rate between the US dollar and South Korean won in the foreign exchange trading room of the headquarters of KEB Hana Bank in Seoul, South Korea, Friday, Feb. 4, 2022. Asian stocks were mixed on Friday after a historic drop in the share price of parent Facebook’s stock helped lower d other tech stocks on Wall Street. (AP Photo/Ahn Young-joon)

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Wall Street ended a rather bullish week for stocks on Friday with a mixed end to major indexes and a surge in Treasury yields after a U.S. jobs report raised investor expectations that the Federal Reserve could soon start raising interest rates sharply.

The S&P 500 settled for a 0.5% gain after swinging between a 0.6% decline and a 1.4% gain. The Dow Jones Industrial Average slipped 0.1% after a last-minute selloff. The Nasdaq composite rose 1.6%. All three indexes posted a weekly gain for the second week in a row.

The latest monthly jobs data was the focus of investors’ concerns. The Labor Department said employers added 467,000 jobs last month, tripling economists’ forecasts. Some economists even expected a loss of jobs amid the spike in coronavirus infections in January due to the omicron variant.

The stronger-than-expected data appears to lock in the Fed’s pivot to fighting inflation by raising rates and taking other actions that would ultimately dampen markets. A 13.5% gain for online retail giant Amazon after the company released a strong earnings report helped lift the S&P 500, although more shares fell than rose in the benchmark index.

“Until you get a clearer picture of what the Fed tightening will be like, you should expect volatility to be similar to what we’ve seen over the past two weeks,” said Matt Stucky, senior portfolio manager at Northwestern Mutual. Richness.

The S&P 500 rose 23.09 points to 4,500.53, while the Dow slipped 21.42 points to 35,089.74. The Nasdaq gained 219.19 points to 14,098.01, while smaller shares of the Russell 2000 rose 11.33 points, or 0.6%, to 2,002.36.

Treasury yields jumped immediately after the release of the jobs report on expectations that the Fed will raise short-term interest rates more aggressively than expected. The two-year yield, which tends to move with expectations for Fed stocks, jumped to its highest level since the start of the pandemic and is more than double what it was two months ago. .

Most people expect the Fed to raise short-term rates next month from their all-time low of near zero, with the only question being how much. Friday’s jobs report now gives investors a nearly 32.7% chance of a 0.50 percentage point increase, instead of the traditional 0.25 point. That’s more than double the probability Wall Street predicted a day earlier, according to CME Group.

Any increase would mark a sharp turnaround from much of the past two years, when ultra-low rates drove up prices for everything from stocks to cryptocurrencies. Bonds paying more interest would mean that investors feel less need to chase such risky returns.

That’s why Wall Street has been so shaky over the past month as investors rush to take action to get ahead of the Fed. On the one hand, higher rates will likely mean that equity investors pay lower prices for every dollar of profit a company produces. On the other hand, stock prices could still remain resilient if these corporate earnings continue to rise.

Stocks considered the most expensive have been hardest hit by the Wall Street reorganization. Much of the focus has been on tech and internet stocks that have soared during the pandemic on expectations that they can continue to grow regardless of the economy.

Even there, uncertainty still reigns as some tech-focused companies reported earnings that continued to beat analysts’ expectations, while others, like Facebook’s parent company, stumbled.

Amazon joined the list of early adopters after announcing stronger results for its latest quarter than analysts expected. Because it’s one of the biggest stocks on Wall Street by market value, its movements have an outsized effect on the S&P 500 and other indexes. The company also set a record for the largest single-day market value gain by a U.S. company, adding $191 billion to its market value, according to FactSet.

Amazon’s big jump in market value came a day after a historic tumble in shares of Facebook’s parent company wiped out more than $230 billion in market value, which was the biggest loss in value ever. day for an American company. Meta fell another 0.3% on Friday.

Facebook’s parent company fell another 0.3% a day after wiping more than $230 billion from its market value, by far the biggest one-day loss in history for a US company.

Snapchat’s parent Snap soared 58.8% and Pinterest gained 11.2% following its own revenue reports.

Ford fell 9.7% and was another of the heaviest weights in the S&P 500 after reporting weaker-than-expected revenue and earnings for the last quarter.

Shortages of computer chips continue to hurt its auto production. These supply chain issues have been at the heart of the high inflation that is tearing the world apart, and price increases at the US consumer level are at an all-time high in nearly 40 years.

This increases the pressure on the Fed to act decisively to bring inflation under control. Wage data in Friday’s jobs report may have ratcheted up the pressure.

The average hourly wage of workers jumped 5.7% in January from a year earlier. This is a faster acceleration from December’s 4.9% rise than economists had expected. While such increases are attractive to workers, higher wages can also fuel longer-lasting inflation than if gasoline or other commodity prices were to rise alone.

With rising expectations for Fed action, the two-year Treasury yield jumped to 1.31% from 1.19% on Thursday night. The 10-year yield jumped to 1.92% from 1.82%.

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AP Business Writer Elaine Kurtenbach contributed. Veiga reported from Los Angeles.

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Asian stocks mixed as profits fuel gains on Wall Street | Economic news

By ELAINE KURTENBACH, AP Business Writer

BANGKOK (AP) — Stocks were mixed in Asia on Thursday as the latest batch of corporate earnings reports kept investors in a buying mood and pushed benchmarks on Wall Street higher.

Markets in China remained closed for the Lunar New Year holiday. Tokyo’s Nikkei 225 lost 1.1% to 27,241.31 while the S&P/ASX 200 fell 0.1% to 7,078.00. Seoul’s Kospi climbed 1.7% to 2,707.82, catching up with earlier gains elsewhere after South Korean markets reopened after the holidays.

US futures fell, with the contract for the S&P 500 down 1%. That of the Dow Jones industrialists fell by 0.1%.

Investors look at the latest round of corporate earnings to gauge the damage rising costs have had on different industries and how companies will weather inflation going forward.

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Most of the companies that reported results for the last three months of 2021 achieved better-than-expected profits and revenues, despite the higher costs they face due to rising inflation.

But investors in Asia were shaken when Facebook’s parent Meta Platforms plunged 22.9% in after-hours trading after its latest quarterly earnings fell short of Wall Street estimates. .

Oil prices fell after major oil-producing countries decided on Wednesday to stick to their plan for a little more oil in the global economy. This will likely keep prices near seven-year highs. The 23-member OPEC+ alliance opted to add 400,000 barrels per day in March.

Benchmark U.S. crude oil fell 55 cents to $87.71 a barrel in electronic trading on the New York Mercantile Exchange. It had gained 6 cents to $88.26 a barrel on Wednesday.

Brent crude, the basis for international oil pricing, fell 43 cents to $89.04 a barrel.

On Wednesday on Wall Street, the S&P 500 rose 0.9% to 4,589.38. The Dow Jones Industrial Average rose 0.6% to 35,629.33 and the Nasdaq added 0.5% to 14,417.55. The indices are on pace for strong gains this week.

Smaller company stocks held up against the broader market rally. The Russell 2000 Index fell 1% to 2,029.52.

Traders pushed up shares of several companies that posted strong quarterly results, which helped boost the market overall. Alphabet, Google’s parent company, jumped 7.5% for the biggest gain in the S&P 500 after saying its digital advertising business propelled a 36% rise in earnings last quarter. Chipmaker Advanced Micro Devices rose 5.1% after reporting surprisingly strong fourth-quarter financial results and giving investors encouraging sales forecasts.

About three-quarters of companies in the benchmark S&P 500 rose, led by communications services and technology stocks. Healthcare companies also accounted for a large share of the gains. Large retailers and other businesses that depend directly on consumer spending have fallen. Amazon slipped 0.4% and Gap fell 3.3%.

Bond yields fell. The 10-year Treasury yield fell to 1.77% from 1.80% on Tuesday evening.

Markets face a variety of threats, including rising inflation, the prospect of higher interest rates, potential conflict in Ukraine, and the continued slowdown of COVID-19 on economic recovery.

With inflation at its highest level in 40 years, rising costs are threatening profit margins and putting pressure on consumer spending. The Federal Reserve intends to raise interest rates in an attempt to rein in price increases. Investors expect the first rate hike in March and at least three more in 2022.

With about 40% of S&P companies having released quarterly results so far this earnings season, about 64% have reported earnings and revenue that beat analyst estimates, according to S&P Global Market Intelligence.

Some failed to meet Wall Street’s expectations.

PayPal fell 24.6%, its worst trading day since splitting from eBay in 2015, after reporting a weak quarter and subdued guidance.

In other trading, the US dollar remained unchanged at 114.43 Japanese yen. The euro was stable at $1.1306.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Stocks fall on Wall Street as big tech companies slide

A man looks at an electronic bulletin board of a securities firm in Tokyo, Tuesday, Feb. 1, 2022. Asian stocks gained on Tuesday, reflecting broad overnight gains on Wall Street, while trading in China and most other regional markets were closed for Lunar New Vacations year-round.  (AP Photo/Koji Sasahara)

A man looks at an electronic bulletin board of a securities firm in Tokyo, Tuesday, Feb. 1, 2022. Asian stocks gained on Tuesday, reflecting broad overnight gains on Wall Street, while trading in China and most other regional markets were closed for Lunar New Vacations year-round. (AP Photo/Koji Sasahara)

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Stocks fell slightly in morning trading on Wall Street on Tuesday as the market emerges from its worst month since the pandemic began nearly two years ago.

The S&P 500 fell 0.3% at 10:16 a.m. EST. The Dow Jones Industrial Average fell 31 points, or 0.1%, to 35,100 and the Nasdaq fell 0.7%.

Technology stocks occupied the most important place in the market. Apple fell 1.1% and Microsoft 1.3%. The sector has been particularly sensitive to concerns about rising interest rates this year. Higher interest rates tend to make expensive growth stocks, like big tech companies, less attractive to investors.

Industrial stocks made strong gains, led by a 12.3% rise in UPS after the parcel delivery service reported results much better than analysts had expected. Rival FedEx rose 4%.

Banks also gained ground as bond yields rose. The yield on the 10-year Treasury, which is used to set rates on mortgages and many other types of loans, rose to 1.81% from 1.77% on Monday evening. Bank of America rose 1%.

Stocks have fallen so far this year as investors face a long list of threats to economic growth and markets.

The economic recovery is threatened by a persistent rise in inflation which has increased costs for businesses and consumers. The big fear is that higher prices passed on to consumers will eventually cut spending and dampen economic growth.

The Federal Reserve changes its monetary policy and plans to raise interest rates to combat rising inflation, which will affect investments and stock prices. Ultra-low rates and other stimulus helped markets recover from the initial shock of the coronavirus pandemic and then underpinned stunning gains. Investors expect the Fed to start raising interest rates in March, but there is a lot of uncertainty about how far and how quickly the Fed will act throughout the year. .

The virus pandemic is still a lingering threat and each new variant could lead to a surge of cases that threatens businesses and consumer activity.

Investors are looking at the latest set of results, in part to see how inflation, the virus pandemic and other factors affect companies and their operations going forward.

Exxon Mobil rose 5.2% after reporting surprisingly strong fourth-quarter earnings as oil demand continued to improve.

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Asian stocks mixed after Wall Street losses

A woman wearing a face mask walks near a bank in downtown Seoul, South Korea, Monday, Jan. 24, 2022. Asian markets mostly fell on Monday after a selloff gave Wall Street its worst week since the pandemic began in early 2020. (AP Photo/Lee ​​Jin-man)

A woman wearing a face mask walks near a bank in downtown Seoul, South Korea, Monday, Jan. 24, 2022. Asian markets mostly fell on Monday after a selloff gave Wall Street its worst week since the pandemic began in early 2020. (AP Photo/Lee ​​Jin-man)

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Stocks were mixed on Monday in Asia after Wall Street recorded its worst week since the pandemic began in 2020.

Benchmarks fell in Hong Kong, Seoul and Sydney but rose in Tokyo. Shanghai has changed little. US futures were higher.

Investors are increasingly worried about how aggressively the Federal Reserve, which is holding a policy meeting this week, might act to rein in rising inflation.

Historically low interest rates, called quantitative easing, or QE, have helped support the broader market as the economy absorbed a heavy hit from the pandemic in 2020 and then recovered over the past two years.

“The FOMC (Fed) meeting dominates the macro calendar this week and should keep risk sentiment on the tentative side with the end of QE and imminent rate hikes likely to be announced,” said economists Nicholas Mapa and Robert ING’s Carnell in a statement. remark.

Some economists believe the US central bank needs to act faster to curb soaring prices by raising rates. Consumer prices in the United States rose 7% in December from a year earlier, the largest increase in nearly four decades.

Rising costs have also raised fears that consumers will begin to cut back on spending due to continued pressure on their wallets. At the same time, outbreaks of the omicron variant of the coronavirus threaten to slow recovery from the crisis.

Tokyo’s Nikkei 225 index edged up 0.2% to 27,588.37, while Hong Kong’s Hang Seng fell 1% to 24,721.49. In Australia, the S&P/ASX 200 lost 0.5% to 7,139.50 and India’s Sensex fell 1.7% to 58,072.62.

South Korea’s Kospi fell 1.5% to 2,794.26 on the back of a sell-off from big tech companies like Samsung and LG Chemical. The Thai SET lost 0.6%.

The Shanghai Composite Index gained less than 0.1% to 3,524.11.

On Friday, the benchmark S&P 500 fell 1.9% to 4,397.94, down 5.7% for the week in its worst weekly loss since March 2020.

The tech-heavy Nasdaq Composite Index fell 2.7% to 13,768.92. It has fallen for four consecutive weeks and is now more than 10% below its most recent peak, putting it in what Wall Street considers a market correction.

The Dow Jones Industrial Average fell 1.3% to 34,265.37.

Peloton rose 11.7% after the maker of exercise bikes and treadmills said second-quarter revenue would meet previous estimates. The stock fell a day earlier after CNBC reported that Peloton was temporarily halting production of exercise equipment to stem a drop in sales.

With investors expecting the Fed to start raising rates as soon as its March policy meeting, expensive tech stocks and other expensive growth stocks now look relatively less attractive.

Technology and communications stocks were among the market’s biggest drags on Friday. Video streaming service Netflix plunged 21.8% after posting another quarter of disappointing subscriber growth. Disney, which has also been trying to grow its subscriber base for its streaming service, fell 6.9%.

Treasury yields have fallen as investors turn to safer investments. The 10-year Treasury yield was flat Monday at 1.77%.

The Fed’s benchmark short-term interest rate is currently in a range of 0% to 0.25%. Investors now see a nearly 70% chance that the Fed will raise the rate by at least one percentage point by the end of the year, according to the CME Group’s Fed Watch tool.

In other trading, the benchmark U.S. crude oil gained 55 cents to $85.69 a barrel in electronic trading on the New York Mercantile Exchange. It fell 41 cents to $85.14 a barrel on Friday.

Brent crude, the pricing basis for international oils, added 59 cents to $88.48 a barrel.

The US dollar fell from 113.68 yen to 113.82 Japanese yen. The euro slipped to $1.1319 from $1.1346.

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Tech and banking stocks drag Wall St to new 2022 low

The 10-year yield “continues to climb painfully, under an increasingly aggressive Federal Reserve,” said Ross Mayfield, investment strategy analyst at Baird. “Until last weekend, I hadn’t seen any speculation of two rate hikes at the March meeting, and now you’re starting to hear that chatter.”

The S&P 500 fell 85.74 points to 4,577.11, the Dow fell 543.34 points to 35,368.47 and the Nasdaq fell 386.86 points to 14,506.90. The indices all hit new lows for the year. The Nasdaq bore the brunt of the losses, shedding 7.3% this month. That puts the index within 2.7% of a correction, Wall Street speaks of when a stock or index falls 10% or more from its last high. The S&P 500 is down nearly 4% for the month after hitting an all-time high on the first trading day of the year.

The latest wave of selling comes as Wall Street tries to predict how much the Fed will raise interest rates and how quickly. The central bank has accelerated its plan to reduce bond purchases and plans to raise interest rates sooner and more often than Wall Street had expected.

The Fed is under pressure to reduce inflation, which surged last month at its fastest pace in nearly 40 years. Meanwhile, the labor market rebounded from last year’s brief but intense coronavirus slump, leaving the unemployment rate at a pandemic low of 3.9% last month, giving the central bank more than leeway to curb the unprecedented support it has provided to the economy. since the pandemic hit.

While higher rates could help stem the high inflation sweeping the world, they would also signal an end to the conditions that have put financial markets in “easy mode” for many investors since the start of 2020.

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Asian stocks mixed after China reports slower growth

A woman wearing a face mask walks past a bank's electronic board showing the Hong Kong stock index in Hong Kong, Monday, Jan. 17, 2022. Stocks were mixed in Asia on Monday after China announced its economy had increased at an annual rate of 8.1%.  in 2021, although growth slowed to half that level in the last quarter.  (AP Photo/Kin Cheung)

A woman wearing a face mask walks past a bank’s electronic board showing the Hong Kong stock index in Hong Kong, Monday, Jan. 17, 2022. Stocks were mixed in Asia on Monday after China announced its economy had increased at an annual rate of 8.1%. in 2021, although growth slowed to half that level in the last quarter. (AP Photo/Kin Cheung)

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Stocks were mixed in Asia on Monday after China reported its economy grew at an annual rate of 8.1% in 2021, although growth slowed to half that level in the last quarter.

Tokyo, Shanghai and Sydney rose, while Hong Kong and Seoul fell.

The weakness of the Chinese economy towards the end of 2021 prompts suggestions that Beijing should step in to support growth with interest rate cuts or by injecting money into the economy through spending on public works. .

Shortly before the release of growth data, China’s central bank announced a cut in average lending rates to commercial banks to the lowest level since 2020.

“Economic momentum remains weak amid repeated virus outbreaks and a struggling property sector,” Capital Economics’ Julian Evans-Pritchard said in a commentary. He expects Chinese policymakers to maintain relatively tight limits on loans and control credit growth.

“The bottom line is that policy easing is likely to cushion the economic downturn rather than cause a rebound,” he said.

Slowing activity in China, the region’s largest economy, may dampen growth across the region. Lockdowns and other precautions imposed to combat coronavirus outbreaks can also exacerbate shortages of key parts and components, adding to shipping and supply chain challenges.

The Shanghai Composite Index gained 0.6% to 3,542.74, while Hong Kong’s Hang Seng fell 0.7% to 24,2207.75.

South Korea’s Kospi fell 1.1% to 2,890.10 after North Korea fired two suspected ballistic missiles into the sea early Monday in its fourth weapons launch this month, the report said. South Korean military, with the apparent aim of demonstrating its military might amid paused diplomacy with the United States. and the closing of borders in the event of a pandemic.

In Tokyo, the Nikkei 225 rose 0.7% to 28,333.52 as the government announced machinery orders rose in November as private investment and manufacturing activity improved during a lull in coronavirus outbreaks. coronavirus. Orders from shipbuilders jumped 170%.

Australia’s S&P/ASX 200 climbed 0.3% to 7,417.30.

On Friday, the S&P 500 gained 0.1%, closing at 4,662.85. It surged in the closing minutes of trading after falling around 1% earlier in the day. The tech-heavy Nasdaq posted a 0.6% gain, closing at 14,893.75. The Dow Jones Industrial Average fell 0.6% to 35,911.81.

Small company stocks also rebounded from an early plunge. The Russell 2000 Index rose 0.1% to 2,162.46.

A rally in tech stocks, along with gains in energy and other sectors, helped offset declines in banks and elsewhere in the market at a time when investors were mostly focused on a mix of reports on corporate profits and discouraging retail sales data.

The mixed end capped a choppy week of trading on Wall Street that deepened the market’s slide in January. The benchmark S&P 500, which climbed 26.9% in 2021, is now about 2.8% below the all-time high it hit on Jan. 3.

The Commerce Department reported Friday that retail sales fell 1.9% in December after Americans cut spending in the face of product shortages, rising prices and the appearance of the omicron variant.

It was the latest in a series of economic reports this week that raised concerns about inflation and its impact on businesses and consumer spending.

Rising prices have prompted companies to pass on more costs to consumers. Consumers cut spending in department stores, restaurants and online due to rising prices and supply shortages.

Concerns about persistently rising inflation are also prompting the Federal Reserve to scale back bond purchases and consider raising interest rates sooner and more often than Wall Street expected less than a decade ago. ‘a year.

The 10-year Treasury yield remained stable at 1.79%.

The price of U.S. crude oil rose 46 cents to $84.28 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, it rose 2.1%, helping to lift energy stocks.

Brent crude added 26 cents to $86.32 a barrel.

The US dollar fell from 114.18 yen to 114.49 Japanese yen. The euro remained unchanged at $1.1417.

___

AP Business Writer Joe McDonald in Beijing contributed.

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Fed’s Powell: High Inflation Threatens Labor Market

FILE - Federal Reserve Chairman Jerome Powell speaks during a Senate Banking Committee hearing on Capitol Hill in Washington on Tuesday, November 30, 2021. High inflation is wreaking havoc on American families, acknowledged Powell in remarks to be delivered at a Congressional hearing on Tuesday, Jan. 11, 2022, where he is sure to face some tough questions on the matter.  (AP Photo / Andrew Harnik, file)

FILE – Federal Reserve Chairman Jerome Powell speaks during a Senate Banking Committee hearing on Capitol Hill in Washington on Tuesday, November 30, 2021. High inflation is wreaking havoc on American families, acknowledged Powell in remarks to be delivered at a Congressional hearing on Tuesday, Jan. 11, 2022, where he is sure to face some tough questions on the matter. (AP Photo / Andrew Harnik, file)

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Warning that high inflation could make it more difficult to restore the job market, Federal Reserve Chairman Jerome Powell said on Tuesday that the Fed would raise interest rates faster than it now forecasts if necessary to stem the surge in prices.

With U.S. households pressed by rising costs for food, gasoline, rents, cars and many other items, the Fed is under pressure to curb inflation by raising rates to slow borrowing and debt. expenses. At the same time, the economy has recovered enough that the Fed’s ultra-low interest rate policies are no longer necessary.

“If we need to raise interest rates further over time, we will,” Powell said at a Senate Banking Committee hearing, which is considering his appointment for a second four-year term.

The difficult challenge for Powell if he is confirmed for a new term, as scheduled, was underscored by questions he faced on Tuesday from Democratic and Republican senators. They urged him to raise rates to reduce inflation, but not to raise borrowing costs to the point that the economy fell into recession.

Fed officials have forecast three hikes to their short-term benchmark rate this year, although some economists say they are planning up to four hikes in 2022.

Powell’s appointment is expected to be approved by the committee in the coming weeks and then confirmed by the entire Senate with bipartisan support. At Tuesday’s hearing, he drew most favorable comments from senators on both sides. A Republican first elevated to the presidency by President Donald Trump, Powell has also been credited by many Democrats for sticking to ultra-low rate policies to support quick hiring over the past 18 months.

In his testimony, Powell rejected suggestions by some Democratic senators that the rate hikes would weaken hiring and potentially leave many people, especially low-income people and black Americans, out of work. Fed rate hikes typically increase borrowing costs for many consumer and business loans and have the effect of slowing the economy.

But Powell argued that the rise in inflation, if it persists, also poses a threat to the Fed’s goal of getting almost everyone back to work. Low-income families have been hit particularly hard by soaring inflation, which wiped out the wage increases many enjoyed.

“High inflation is a serious threat to achieving maximum employment,” he said.

The economy, the Fed chairman added, must grow for an extended period to get as many Americans back to work as possible. Controlling inflation before it takes root is necessary to keep the economy expanding, he said. If prices continue to rise, the Fed could be forced to brake much harder by raising interest rates sharply, threatening hiring and growth.

Powell received praise from Democratic Senator from Ohio, Sherrod Brown, chair of the committee, and from Pennsylvania Senator Pat Toomey, the panel’s top Republican.

“The president puts results before partisanship, by reappointing a Federal Reserve chairman from the other political party,” Brown said. “As president, along with President Biden, he has helped us achieve historic economic progress.”

“There is broad bipartisan support for President Powell’s re-appointment,” Toomey added.

Yet Toomey also criticized some of the Fed’s 12 regional banks for staging events dealing with climate change and “so-called racial justice,” which Toomey said went well beyond the Fed’s mandate. . He cited an event, hosted by the Federal Reserve Bank of Boston, in which he said attendees called for police funding.

“The disturbing politicization of the Fed puts its independence and effectiveness at risk,” Toomey said.

And Sen. Richard Shelby, a Republican from Alabama, criticized Powell for the central bank’s initial characterization of the price spikes that began this spring as “transient.”

“I’m worried if the Fed missed the boat to tackle inflation earlier, a lot of us are,” Shelby said. “As a result, the Fed under your leadership has lost a lot of credibility.”

Inflation has hit its highest level in four decades, and on Wednesday the government is expected to announce that consumer prices have jumped 7.1% in the past 12 months, believed to be the largest since 1982.

Powell said the Fed mistakenly expected supply chain bottlenecks driving up the prices of goods such as cars, appliances and furniture to not last as long as they did. did. Once off the hook, the prices of things like used cars, which have skyrocketed over the past year, would come back down, he said.

But for now, these supply chain issues have persisted, and while there are signs of easing, Powell said progress was limited. He noted that many cargo ships remain moored outside the Port of Los Angeles and Long Beach, the largest in the country, awaiting unloading.

The number of people working or looking for work also remains well below pre-pandemic levels, Powell noted. Millions of Americans have taken early retirement or are avoiding their jobs for fear of the coronavirus. The Fed predicted that more of these people would return to the workforce than they did.

The shrinking workforce has forced companies to offer much higher wages to attract and keep employees. Powell said that was not primarily the reason prices are high right now, but it “may be a problem for inflation in the future.”

Economists and former Fed officials fear the Fed is lagging behind inflation. Last Friday’s jobs report for December, which showed a sharp drop in the unemployment rate to a healthy 3.9%, and an unexpected rise in wages, helped fuel those concerns. While lower unemployment and higher wages benefit workers, these trends can potentially fuel higher prices by encouraging more spending.

At the Fed’s last meeting in December, Powell said the central bank was quickly ramping up efforts to tighten credit in a bid to bring inflation under control. The Fed will stop buying billions of dollars in bonds in March, ahead of its previously announced target of doing so in June. These bond purchases were meant to encourage more borrowing and spending by lowering long-term rates.

And the expectation by Fed officials that they will hike short-term rates three times this year marks a radical departure from September, when they were divided over doing it only once.

The flood of new omicron infections will not slow the Fed’s move towards more appropriate policies for the economy to return to normal, Powell said during the hearing, because so far it doesn’t seem not weigh on the economy.

“It is really time for us to move from these pandemic emergency settings to a more normal level,” he added. “It’s a long way to normal from where we are.”

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Richard Clarida quits Fed early after new transaction questions

Richard H. Clarida, vice chairman of the Federal Reserve, announced Monday that he would resign from his post two weeks earlier than expected. Although he didn’t give a reason, he had come under scrutiny for transactions he made in 2020 as the central bank was on the verge of saving financial markets.

“With my statutory term as governor expiring on January 31, 2022, I am writing to inform you that I intend to resign from the board of directors on January 14, 2022”, wrote Mr. Clarida in a letter to the president. . Biden that the Fed released on Monday.

The New York Times reported last week that Mr Clarida corrected his financial information for 2020 at the end of December. Ethics experts said one of his updated transactions raised questions – he sold an equity fund on February 24 before buying it back on February 27, just before the Fed chairman announced. on February 28 that the central bank was ready to help the markets and the economy.

His first statements had only noted the purchase of the equity fund, which the Fed had described in its name as a planned portfolio rebalancing. But the rapid move out and back of stocks called that explanation into question, some experts said, and the buyout could have put Mr. Clarida in a position to benefit as the Fed reassured markets.

Neither the Fed nor Mr. Clarida provided a new explanation for the transactions, although the Fed’s ethics office noted in the updated record that they always appeared to be in compliance with conflict of interest laws.

Mr Clarida’s updated disclosure garnered widespread media coverage and the attention of lawmakers. Massachusetts Senator Elizabeth Warren called on the Fed on Monday to release more information on the transactions of senior Fed officials in light of the news.

The amended disclosure and the rush of attention came at an inopportune time for Jerome H. Powell, the Fed chairman, who was reappointed to his post by Mr. Biden. He is due to appear Tuesday at a confirmation hearing before the Senate Banking Committee.

Ms Warren sits on the banking committee, so Mr Powell is always pretty sure he is wondering why some Fed officials traded so actively as the markets turned and the Fed staged a huge bailout at the start of the pandemic.

“The whole story of rebalancing, which just collapses over the fact that it sold and then bought,” said Simon Johnson, an economist at the Massachusetts Institute of Technology. “If you’re President Powell, you don’t want your reconfirmation hearing to focus on that. “

Mr Powell and his colleagues have revamped the central bank’s ethical guidelines in recent months – issuing plans in October to revise them and prevent many types of financial activity, including trading in times of turmoil. He can point out that this shows how seriously the Fed has taken the issue.

Mr Clarida’s resignation is the latest development in a months-long trade scandal that has involved senior officials and prompted high-profile departures at the Fed.

Financial information released in late 2021 showed Robert S. Kaplan, the former chairman of the Federal Reserve Bank of Dallas, had made large transactions in individual stocks, while Eric S. Rosengren, the former president of the Boston Fed, had traded real estate securities. These measures prompted an immediate and intense reaction from lawmakers, ethics experts and former Fed employees.

Fed officials actively rescued a wide range of markets in 2020. In March and April, they cut rates to zero, bought mortgage and government bonds en masse, and implemented debt bailouts. businesses and municipalities.

The concern is that continuing to process the affected securities for their own portfolios throughout the year could have given managers the opportunity to benefit from their insider knowledge.

Mr. Kaplan resigned in September, citing the scandal; Mr Rosengren resigned simultaneously, citing health concerns.

Mr. Clarida’s term was to end at the end of this month because his seat as governor was expiring. Bloomberg News first reported on his purchase of equity funds – which was visible before he corrected the disclosure – in October.

Although Mr Clarida did not address the trade issues in his resignation letter, he referred to them indirectly during a speech late last year.

“I have always fulfilled honorably and with integrity of public service obligations,” he said. said in mid-October.

the The Fed’s government watchdog investigating those responsible for transactions made in 2020 and Ms Warren has requested an investigation from the Securities and Exchange Commission. The SEC does not comment on whether such investigations are ongoing.

Mr. Clarida has served as Vice President since 2018, and during that time he has been a close associate of Mr. Powell’s and a valued Second-in-Command. His speeches were closely watched by Wall Street for the political signals they often offered, and he was praised for his skills as a clear and careful communicator.

He also led a campaign to revamp the Fed’s policy-making framework to make it more jobs-oriented and better suited to the challenges of the modern economic age, a hallmark of the Fed’s first term. Mr. Powell.

“I will miss his wise advice and vital ideas,” said Mr. Powell in a statement announcing the early departure of Mr. Clarida.

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Stocks soar on Wall Street ahead of Christmas break

A forex trader watches screens showing the Composite Korean Stock Price Index (KOSPI) and the exchange rate between the US dollar and the South Korean won, in the <a class=foreign exchange trading room at KEB Hana headquarters Bank in Seoul, South Korea, Wednesday, December 22, 2021. Asian stock markets followed Wall Street higher on Wednesday after President Joe Biden reassured investors by calling for vaccinations and tests, but no travel restrictions in response to the variant of the omicron coronavirus. (AP Photo / Ahn Young-joon)” title=”A forex trader watches screens showing the Composite Korean Stock Price Index (KOSPI) and the exchange rate between the US dollar and the South Korean won, in the foreign exchange trading room at KEB Hana headquarters Bank in Seoul, South Korea, Wednesday, December 22, 2021. Asian stock markets followed Wall Street higher on Wednesday after President Joe Biden reassured investors by calling for vaccinations and tests, but no travel restrictions in response to the variant of the omicron coronavirus. (AP Photo / Ahn Young-joon)” loading=”lazy”/>

A forex trader watches screens showing the Composite Korean Stock Price Index (KOSPI) and the exchange rate between the US dollar and the South Korean won, in the foreign exchange trading room at KEB Hana headquarters Bank in Seoul, South Korea, Wednesday, December 22, 2021. Asian stock markets followed Wall Street higher on Wednesday after President Joe Biden reassured investors by calling for vaccinations and tests, but no travel restrictions in response to the variant of the omicron coronavirus. (AP Photo / Ahn Young-joon)

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Stocks closed higher on Wall Street on Wednesday, adding to the gains for the week before the Christmas break. The S&P 500 rose 1%, the Nasdaq rose 1.2%, and the Dow Jones Industrial Average rose 0.7%. The Russell 2000, a measure of small business stocks, rose 0.9%. Tech companies and a mix of retailers led the gains. The major indices are still on track for weekly gains after a rally on Tuesday. European and Asian markets also closed higher. The yield on the 10-year Treasury bill fell to 1.46%. US markets will be closed on Friday for Christmas.

THIS IS A CURRENT UPDATE. AP’s previous story follows below.

Stocks rose broadly in afternoon trading on Wall Street on Wednesday, adding to gains in the week before the Christmas holidays.

The S&P 500 was up 0.6% at 2:38 p.m. EST. The Dow Jones Industrial Average rose 176 points, or 0.5%, to 35,670 and the Nasdaq rose 0.6%.

The Russell 2000, a measure of small business stocks, rose 0.4%. The indices were mainly higher in Europe and Asia.

All major US indices are still on track for weekly gains after several turbulent days where stocks rebounded between big losses and solid gains. It’s a shortened week for traders, with US markets closed on Friday for Christmas.

Retailers and other businesses that rely on consumer spending accounted for a significant portion of the gains. They rose following an encouraging report on consumer confidence.

Tesla jumped 6.4% for the biggest gain in the S&P 500 after CEO Elon Musk reportedly said he sold enough shares to meet his goal of selling 10% of his stake in the electric vehicle maker.

Technology and healthcare stocks have also helped lift the market. Microsoft rose 1.1% and Abbott Laboratories rose 2.2%.

Traders increased their shares in cruise lines, hotel operators and other travel-related stocks. Carnival rose 3.6%, Marriott rose 2.7% and Expedia Group rose 2.4%.

Utility and industrial companies have lagged behind the market.

Energy futures rose as the price of US crude oil rose 2.5%.

Bond yields have mostly fallen. The 10-year Treasury yield fell to 1.46% from 1.48% on Tuesday night.

The latest increase in coronavirus cases due to the omicron variant has weighed on markets, along with concerns about rising inflation and its impact on economic growth.

The Commerce Department said on Wednesday that the US economy grew at a rate of 2.3% in the third quarter, slightly better than previously thought. But the prospects of a strong rebound going forward are clouded by the rapid spread of the latest variant of the coronavirus.

“The market is a little uncertain about this (omicron), but seems somewhat convinced it’s not going to turn into another foreclosure,” said Scott Wren, senior global markets strategist at Wells Fargo Investment Institute.

Governments in Asia and Europe have tightened travel controls or pushed back plans to ease restrictions already in place. In the United States, President Joe Biden announced on Tuesday that the government would provide rapid test kits and increase vaccination efforts, but gave no indication of plans for restrictions that could disrupt the economy.

Investors have also been busy moving money between sectors as the end of the year nears, and they are bracing for higher interest rates in 2022. The Federal Reserve has said it will step up. the process of reducing its bond purchases that have helped keep interest rates low and that opens the door to central bank rate hikes in 2022.


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Global stocks drop amid virus concerns and tighter Fed policy

A woman walks past the electronic board of a securities firm in Tokyo on Monday, December 20, 2021. Asian stock markets followed Wall Street lower on Monday amid concerns over the latest variant of the coronavirus and the stricter Federal Reserve policy.  (AP Photo / Koji Sasahara)

A woman walks past the electronic board of a securities firm in Tokyo on Monday, December 20, 2021. Asian stock markets followed Wall Street lower on Monday amid concerns over the latest variant of the coronavirus and the stricter Federal Reserve policy. (AP Photo / Koji Sasahara)

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Global stock markets and Wall Street futures fell on Monday amid concerns over the latest variant of the coronavirus and tighter Federal Reserve policy.

London and Frankfurt opened sharply lower. Shanghai, Tokyo and Hong Kong also fell at the start of a stock market week that will be cut short by Christmas. US benchmark oil fell more than $ 3 a barrel.

The spread of the omicron variant has fueled fears that new restrictions on business and travel could worsen supply chain disruptions and spur inflation.

“Omicron threatens to be the Grinch to steal Christmas,” Mizuho Bank’s Vishnu Varathan said in a report. The market “prefers security to unpleasant surprises”.

In early trading, the FTSE 100 in London fell 1.7% to 7,143.60 and the DAX in Frankfurt fell 2.4% to 15,155.71. The CAC 40 in Paris collapsed 2% to 6,787.68.

On Wall Street, futures on the benchmark S&P 500 and the Dow Jones Industrial Average fell 1.5%.

The S&P fell 1% on Friday as traders pulled money from the table after the Fed said it would fight inflation by speeding up the withdrawal of economic stimulus. The index is 2% below its all-time high and up 23% for the year.

The Dow Jones lost 1.5% and the Nasdaq composite, dominated by technology stocks, slipped 0.1%.

In Asia, the Shanghai Composite Index slipped 1.1% to 3,593.60 after China’s central bank cut a key interest rate. The bank lowered its one-year prime rate to 0.05%, but left the five-year rate and its main policy rate unchanged.

The reduction is a “small step towards easing” monetary policy without changing efforts to reduce real estate debt, Macquarie’s Larry Hu and Xinyu Ji said in a report. Beijing’s use of multiple interest rates “is confusing, drastically reducing the signal” if only one is cut, they said.

The Nikkei 225 in Tokyo lost 2.1% to 27,937.81 and the Hang Seng in Hong Kong lost 1.9% to 22,744.86.

Seoul’s Kospi was down 1.8% to 2,963.00 and Sydney’s S & P-ASX 200 was down 0.2% to 7,292.20

India’s Sensex index opened down 2.3% to 55,811.05. New Zealand won as Southeast Asian markets retreated.

Traders had made an offer to airlines, cruise lines and other travel-related actions in hopes that the spread of omicron would not trigger more travel checks.

Sentiment has turned as the United States and other governments warn omicron is more prevalent than expected, leading to travel restrictions in some areas and the cancellation of public events.

The US government on Sunday warned of a possible wave of “revolutionary infections” as Americans travel for the Christmas and New Year holidays.

Stocks rallied briefly last week, then fell after Fed officials said on Wednesday they may accelerate cuts in bond purchases that inject money into financial markets. This sets the stage for the Fed to start raising interest rates next year.

Also potentially weighing on sentiment, a US senator said on Sunday that he would not support President Joe Biden’s $ 2 trillion infrastructure, social spending and climate plan. Joe Manchin’s announcement may doom the plan’s chances in the equally divided Senate.

Inflation has been a growing concern throughout 2021. Higher raw material costs and supply chain issues have increased overall costs for businesses, which have raised commodity prices to offset the impact. .

Consumers have so far absorbed these price increases, but they face continued pressure from price increases and this could lead to lower spending.

In energy markets, benchmark US crude plunged from $ 3.57 to $ 67.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell from $ 1.52 on Friday to $ 70.86. Brent crude, the basis of international oil prices, sank from $ 3.41 to $ 70.11 a barrel in London. It lost $ 1.50 the previous session to $ 73.52 a barrel.

The dollar fell to 113.41 yen from 113.70 yen on Friday. The euro gained $ 1.1261 against $ 1.1251.


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U.S. stock indices tumble after their best weekly gain since February

People walk past the electronic board of a securities firm in Tokyo on Monday, December 13, 2021. (AP Photo / Koji Sasahara)

People walk past the electronic board of a securities firm in Tokyo on Monday, December 13, 2021. (AP Photo / Koji Sasahara)

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Shares fell in the afternoon of trading on Wall Street on Monday into a slow start to the week after the market’s best weekly gain since February.

The S&P 500 fell 0.6% at 2:50 p.m. EST. The Dow Jones Industrial Average lost 228 points, or 0.6%, to 35,744 and the Nasdaq was down 0.9%.

Smaller company stocks have held up less well than the broader market, indicating that investors are concerned about economic growth. The Russell 2000 lost 1.2%.

A wide range of retailers that rely on direct consumer spending have suffered some of the biggest losses. Hanesbrands fell 5.4%.

Automakers and travel-related businesses also fell. Ford fell 3.9% and Carnival fell 5%.

Bond yields have fallen. The 10-year Treasury yield fell to 1.43% from 1.49% on Friday night. This has taken a toll on banks, which rely on higher bond yields to charge more lucrative interest on loans. Capital One fell 2.3%.

Industrial and energy companies have also declined.

Sectors considered less risky, including utilities and manufacturers of household products, held up better than the rest of the market. Healthcare companies have also gained ground.

Several large pharmaceutical companies stood out. Moderna climbed 5.9% for the biggest gain in the S&P 500. Pfizer rose 4.3% on news of the purchase of Arena Pharmaceuticals. Bristol Myers Squibb rose 4.6%.

Harley-Davidson rose 5.8% after announcing it would go public with its electric motorcycle division through a blank check company, valuing the company that has been part of the motorcycle maker for 10 years at $ 1.77 billion.

Investors will be watching several economic reports this week and the Federal Reserve for more information on economic growth as 2021 draws to a close and the world continues to try to rid itself of the impact of COVID-19.

Wall Street will receive an inflation update on Tuesday when the Department of Labor releases its Producer Price Index for November, which shows the impact of inflation on costs for businesses. This report will be particularly important with the Fed meeting on Tuesday and Wednesday.

The persistent rise in inflation prompted the central bank to accelerate its plan to curtail bond purchases which have helped keep interest rates low. Investors will be listening to any statements that add details on the timing of this plan and any clues about the impact it may have on how quickly benchmark interest rates will be raised in 2022.


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Wall Street balks as the Fed announces the end of the party, but is it really? | Economic news

By STAN CHOE, AP Business Writer

NEW YORK (AP) – The job of the Federal Reserve, said its longest-serving chairman, is to “pull the bowl of punch when the party starts”, and that is exactly the message Wall Street has taken from the comments from current president Jerome Powell. this week.

Stock prices fell after Powell said the Fed could end its overwhelming support for financial markets sooner than expected on Wall Street. History suggests, however, that stocks don’t always lose out when the Fed pulls out its aid.

Some economists and investors were already calling for such a move given the strong economic recovery after the brief recession last year and the stubborn persistence of high inflation sweeping the world.

But the S&P 500 fell 1.9% in a day after Powell said the Fed’s monthly bond purchases, which recently started to decline by $ 120 billion, could end months earlier than the June target it had been set for. Added to concerns about the novel coronavirus sweeping the world, this has caused Wall Street’s so-called “fear gauge” to rise sharply.

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Wall Street has reason to be concerned. An early end to the Fed’s bond buying program, which has helped keep long-term interest rates low and thus bolster the economy, would allow the central bank to make the most important decision of start raising short-term interest rates.

These have been stuck at a record low near zero since the start of the pandemic, one of the main reasons the S&P 500 has roughly doubled since hitting a four-year low in March 2020 Low rates are also a main reason many investors have dismissed fears that stock prices have climbed too high, too fast.

An investor who buys a 10-year treasury bill, for example, envisions a return of just 1.44%, without even tracking current inflation levels.

“As long as the 10-year remains below 1.50%, there is no alternative” to buying stocks, said Josh Wein, portfolio manager at Hennessy Funds.

To see how this increased Wall Street, consider what investors pay for every dollar in company profits. The price of the S&P 500 is trading at nearly 24 times the earnings per share its companies have made in the past 12 months, according to FactSet. That’s more expensive than its average price-earnings level over the past two decades of just under $ 18.

But stocks could continue to rise even after the Federal Reserve starts raising interest rates. Usually, such rate hike campaigns occur when the US economy has enough strength to stand up, without the help of the central bank. And that in itself can increase corporate profits, the lifeblood of the stock market.

Since 1983, the S&P 500 has performed positively in the 12 months following the start of a rate hike campaign in six of the seven occurrences, according to BofA Global Research. The average yield was 6.1%.

Widen the time horizon to two years after the first rate hike, and the S&P 500 has consistently had a positive return in all but one case.

Certainly, this exception has a similarity to the current market, according to Savita Subramanian, equity strategist at BofA Securities. The S&P 500 was much more expensive than normal in 1999, in the midst of the dot-com bubble, with S&P 500 prices trading at 30.5 times their earnings.

The all-time high for US stocks to perform when the Fed slows down its bond purchases is not so deep. Indeed, these bond buying programs have only become an integral part of the central bank’s toolkit since the 2008 financial crisis.

Stocks struggled a bit in the summer of 2013 when Fed Chairman Ben Bernanke suggested it could start slowing or cutting its bond purchases. This took investors by surprise, and the ensuing mini-market swoon became known as the “taper tantrum”.

But equities nonetheless quickly returned to the upside. The Fed did not finally raise short-term interest rates until the end of 2015, more than two years after the typed tantrum.

“While some fear that the end of the cut will accelerate the point at which interest rates rise, I don’t think that will happen, although this fear of higher rates adds to market nervousness in the short term,” said David Bahnsen, chief investment officer. Officer at The Bahnsen Group.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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European Stocks and US Futures Improve as Omicron Virus Fear Dulls | Economic news

By JOE McDONALD, AP Business Writer

BEIJING (AP) – European stocks and oil prices rebounded and Wall Street was set to open higher on Monday even as Asian markets fell further, with investors weighing the new variant of the coronavirus, omicron, as the ‘found in more countries and prompting some governments to reimpose travel controls.

The references in London, Frankfurt and Paris had won by noon. Indices in Shanghai, Tokyo and Hong Kong ended lower, although losses were lower than on Friday, triggered by reports that the variant first spotted in South Africa appeared to be spreading around the world .

On Wall Street, the benchmark S&P 500 futures contracts rose 0.9%. Futures contracts for the Dow Jones Industrial Average gained 0.7%.

As health officials rushed to analyze the new variant, traders clung to hopes that it wouldn’t be more serious than other strains of the virus.

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“The potential for a less deadly form of the virus appears to provide some respite from the sense of risk that dominates Friday’s trading,” said Joshua Mahony, senior market analyst at IG. “However, the coming weeks are fraught with dangers for investors.”

The FTSE 100 in London rose 1.2% to 7,122.61. The Frankfurt DAX gained 0.6% to 15,352.00, and the Paris CAC 40 rose 0.8% to 6,797.65.

On Friday, the S&P 500 fell 2.3% for its biggest daily loss since February. The Dow Jones lost 2.5%, while the Nasdaq Composite fell 2.2%.

Investors sold shares of banks, energy and airlines last week and shifted money to bonds and other safe-haven assets.

But this pattern was reversed on Monday. IAG, owner of British Airways and Spanish airline Iberia, jumped 4.2%, while UK low-cost carrier Easyjet rose 3.9%.

In the United States, the travel and energy sectors as well as businesses expected to thrive when the pandemic loosens its grip, such as computer chipmakers and hospitals, were to lead the rebound on Monday with Wall Street’s faith in it. a seemingly reinvigorated emerging global economy.

But in Asia, the Nikkei 225 ended down 1.6% at 28,283.92 after Japan announced it would ban foreigners from entry from Tuesday.

The Shanghai Composite Index lost less than 0.1% to 3,562.70, and the Hong Kong Hang Seng lost 0.9% to 23,852.24.

Seoul’s Kospi was down 0.9% to 2,909.32 and Sydney’s S & P-ASX 200 was down 0.5% to 7,239.80.

The Indian Sensex gained 0.3% to 57,260.58. New Zealand, Singapore and Bangkok fell, while Jakarta advanced.

The World Health Organization has called the omicron “highly transmissible,” but it was not clear if it was more dangerous than previous variants.

Governments have imposed new travel controls, fueling investor fears of possible setbacks in containing the pandemic that has killed more than 5 million people since the first cases in late 2019.

The new variant has been found as far away as Hong Kong, Belgium, Denmark, the Netherlands, Australia, Portugal and Israel. The European Union, the United States and Great Britain have imposed restrictions on travel from Africa. Israel has banned the entry of foreigners and Morocco has suspended all inbound flights for two weeks.

The omicron variant could complicate planning for central banks who decide when and how to withdraw stimulus measures that raise stock prices.

Investors were rocked last week when notes from the Federal Reserve’s October meeting showed officials were prepared to consider raising interest rates earlier than expected in response to higher inflation. The Fed previously said its first rate hike may not come until the end of 2022.

In energy markets, benchmark US crude jumped $ 3.41 to $ 71.45 a barrel in electronic trading on the New York Mercantile Exchange, rebounding from Friday’s $ 10.24 drop. Brent crude jumped $ 3.26 to $ 75.98 a barrel in London.

Also on Monday, the Japanese government announced that retail sales rose 1.1% in October from the previous month. Vehicle sales fell 6.7%.

The dollar rose to 113.60 Japanese yen from 113.19 yen on Friday. The euro fell from $ 1.1319 to $ 1.1291.

Associated Press writer Kelvin Chan contributed to this report from London.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Biden to Keep Powell as Fed Chairman, Brainard Becomes Vice Chairman | Economic news

By CHRISTOPHER RUGABER, economic editor of the AP

WASHINGTON (AP) – President Joe Biden on Monday said he was appointing Jerome Powell to a second four-year term as Federal Reserve Chairman, endorsing his handling of the economy through a brutal pandemic recession in which politicians The Fed’s ultra-low rates have helped boost confidence and boost the job market.

Biden also said he would appoint Lael Brainard, the only Democrat on the Fed’s board of governors and the preferred alternative to Powell among many progressives, to the post of Vice President.

His decision strikes a note of continuity and bipartisanship at a time when soaring inflation is weighing on households and increasing the risks for the recovery of the economy. By supporting Powell, a Republican who was elevated to his post by President Donald Trump, Biden dismissed progressives’ complaints that the Fed has weakened banking regulations and has been slow to factor climate change into its oversight. banks.

“When our country suffered a job hemorrhage last year and there was panic in our financial markets, Jay’s consistent and decisive leadership helped stabilize markets and put our economy on the back burner. on track for a solid recovery, ”Biden said, using the Powell nickname.

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In a second term that begins in February, Powell would face a difficult and high-risk balance: inflation has hit a three-decade high, causing hardship for millions of families, darkening the recovery and undermining the tenure of the United States. Fed to keep prices stable. But with the economy still more than 4 million jobs below its pre-pandemic level, the Fed has yet to fulfill its other mandate of maximizing employment.

Next year, the Fed is expected to start raising its benchmark interest rate, with financial markets forecasting at least two increases. If it moves too slowly to raise rates, inflation can accelerate further and force the central bank to take more drastic measures later to bring it under control, potentially causing a recession. Yet if the Fed raises rates too quickly, it could stifle hires and the recovery.

If confirmed, Powell would remain one of the most powerful economic leaders in the world. By raising or lowering its short-term interest rate, the Fed seeks to slow or stimulate growth and hiring, and keep prices stable. His efforts to lead the US economy, the world’s largest, usually have global consequences.

The Fed’s benchmark rate, which has been close to zero since the pandemic hit the economy in March 2020, influences a wide range of borrowing costs for consumers and businesses, including mortgages and cards credit. The Fed also oversees the country’s largest banks.

For months, Powell has been the front-runner to be re-elected, but a vigorous campaign by environmental and public interest groups in favor of Brainard has darkened the picture in recent weeks. Critics, including Senator Elizabeth Warren, D-Massachusetts, have argued that Powell relaxed banking regulations put in place after the 2008-2009 financial crisis.

And two other senators voiced their opposition to Powell last week because they said he was not sufficiently committed to using the Fed’s regulatory tools to fight global warming.

Brainard, meanwhile, has cast 20 dissenting votes against changes to financial rules over the past four years. In March 2020, she opposed a regulatory change that she said would reduce the amount of reserves that big banks had to hold to hedge against losses. She also spoke more forcefully than Powell about ways the Fed can deal with global warming.

Biden sought to allay those concerns. He said Powell had pledged to make climate change “a top priority” and agreed to ensure “that our financial regulations stay ahead of emerging risks.”

“Jay, along with the other members of the Fed board that I will appoint, must ensure that we never again expose our economy and our American families to these kinds of risks,” he said. at the White House, referring to the 2008 financial crisis.

Biden still has the option of filling three other positions on the Fed’s board of governors, including that of vice chairman of oversight, a prominent banking regulatory post. Those positions will be filled in early December, Biden said.

Biden admitted that some Democrats had encouraged him to choose a new Fed chairman, for a “fresh start.” But he said he wanted to go in a different direction.

“We need stability and independence at the Federal Reserve,” he said. “I think broad, bipartisan Fed leadership is important, especially now, in such a politically divided nation.”

Biden praised Powell for his efforts to achieve maximum jobs, but did not press him on inflation, which has become the biggest economic threat to his administration. Biden said the US economy is in the midst of a “historic recovery” which gives the Fed the opportunity “to attack inflation from a position of strength, not of weakness.”

Powell said “we know that high inflation negatively impacts families, especially those who are less able to afford the higher costs of basic necessities, such as food, shelter and transportation.” . He pledged to use the tools of the Fed – mainly by raising interest rates – “to prevent higher inflation from taking hold.”

Powell’s re-appointment is expected to have broad approval by the Senate Banking Committee, and then by the Senate as a whole.

Some liberal Democrats such as Sen. Sherrod Brown of Ohio, chairman of the Banking Committee, have supported Powell, as have moderate Democrats, including Sen. Jon Tester of Montana. He was also endorsed by Sen. Pat Toomey, R-Pa., The leading Republican on the panel, and will likely receive broad support from Republicans.

Wall Street applauded the renomination, with stock prices rising and fear measures easing in the market immediately after the announcement. The S&P 500 is about to close at another record.

The 68-year-old lawyer was appointed to the Fed’s Board of Governors in 2011 by President Barack Obama after a lucrative career in private equity and after holding several positions in the federal government.

Unlike his three immediate predecessors, Powell does not have a doctorate. in economy. Yet he earned generally high marks for handling perhaps the world’s most important financial situation, especially in his response to the coronavirus-induced recession.

Still, soaring inflation forced the Powell Fed to slow down its economic stimulus sooner than expected. At its last meeting in early November, the central bank said it would start cutting its monthly bond purchases by $ 120 billion this month and likely end it by mid-2022. These purchases were aimed at keeping long-term borrowing costs low to stimulate borrowing and spending.

For months, Powell called inflation “transient,” but more recently he admitted that higher prices had persisted longer than expected. At a press conference this month, Powell acknowledged that high inflation could last until the end of summer 2022.

Brainard’s rise to the number 2 position of the Fed follows the key role it played in the Fed’s emergency response to the pandemic recession. She is part of a “troika” of key policy makers that includes Powell and Richard Clarida, whom she will replace as vice president in February.

Brainard was the architect of the Fed’s new policy framework, adopted in August 2020, under which it said it would no longer hike rates simply because the unemployment rate had fallen to a low level that could boost the economy. ‘inflation. Instead, the Fed said it would wait for real evidence of the price hike.

Brainard also played a key role in the Fed redefining its maximum employment target as “broad and inclusive,” taking into account the unemployment rate of blacks and other groups and not just Americans as a whole. political decisions.

She also discussed ways in which the Fed could take climate change into account more directly in banking supervision. Many environmental groups say loans to oil and gas companies, as well as commercial real estate developers, could default and cause significant losses to banks if environmental damage worsens or renewables provide a larger share. of electricity production.

“Climate change,” she said, “is expected to have profound effects on the economy and the financial system, and it is already inflicting damage. “

Associated Press writer Josh Boak contributed.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Asian Stocks Rise After Biden and Xi Hold Video Summit | Economic news

By JOE McDONALD, AP Business Writer

BEIJING (AP) – Asian stock markets rose on Tuesday after President Joe Biden and China’s Xi Jinping held a summit meeting via video link.

Shanghai, Tokyo and Hong Kong, which constitute the bulk of the region’s market value, rose. Seoul and Sydney declined.

Wall Street’s benchmark S&P 500 fell less than 0.1% as houseware makers rose and healthcare stocks fell.

Biden told Xi their goal should be to make sure the competition “does not come into conflict.” The two leaders met amid tensions over trade, technology, human rights, Hong Kong and Taiwan. Xi said he was ready to “build consensus” and said the two sides should improve communication.

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The meeting “will dominate the coming session,” although White House officials have “tempered expectations of any meaningful progress,” ActivTrades’ Anderson Alves said in a report.

The Shanghai Composite Index rose 0.3% to 3,543.46 and the Tokyo Nikkei 225 added less than 0.1% to 29,783.18. The Hang Seng in Hong Kong was up 1% to 25,658.04.

The Kospi in Seoul lost 0.2% to 2,994.40 while the S & P-ASX 200 in Sydney lost 0.8% to 7,413.20.

India’s Sensex index opened 0.3% lower at 60,522.38. New Zealand and Singapore fell while Jakarta and Bangkok advanced.

On Wall Street, the S&P 500 fell to 4,682.80. The Dow Jones Industrial Average fell less than 0.1% to 36,087.45. The Nasdaq lost less than 0.1% to 15,853.85.

Investors no longer focus on the latest corporate earnings towards the economic issues that will determine growth through 2022. This includes supply chain issues and rising inflation.

Investors will be watching for any signs that inflation is hampering business operations or consumer spending. Companies have raised prices to pass on higher material costs. Consumers have taken it in stride, but analysts fear they will start cutting spending.

Investors are also waiting to see if Biden decides to appoint Federal Reserve Chairman Jerome Powell for a new term as head of the US central bank.

Also on Tuesday, the Commerce Department was due to report on retail sales in the United States.

Chinese data released on Monday showed retail sales growth in October weakened from the previous month, weakened by anti-coronavirus restrictions and consumer unease over a wave of epidemics.

In energy markets, benchmark US crude rose 54 cents to $ 81.42 per barrel in electronic trading on the New York Mercantile Exchange. The contract advanced 9 cents on Monday to $ 80.88. Brent crude, used as the price base for international oils, added 66 cents to $ 82.71 a barrel in London. It fell 12 cents the previous session to $ 82.05 a barrel.

The dollar rose to 114.15 yen from 114.09 yen on Monday. The euro fell to $ 1.1381 from $ 1.1386.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Global stocks mixed as investors wait for central bank moves

A woman wearing a face mask walks past a bank's electronic board showing the Hong Kong stock index in Hong Kong on Tuesday, November 2, 2021. Asian stocks were mixed on Tuesday amid cautious trading ahead of a policy meeting of the US Federal Reserve.  (AP Photo / Kin Cheung)

A woman wearing a face mask walks past a bank’s electronic board showing the Hong Kong stock index in Hong Kong on Tuesday, November 2, 2021. Asian stocks were mixed on Tuesday amid cautious trading ahead of a policy meeting of the US Federal Reserve. (AP Photo / Kin Cheung)

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Global stocks were mixed on Tuesday amid cautious trading ahead of a US Federal Reserve policy meeting.

The French CAC 40 rose 0.2% to 6,904.57, while the German DAX gained 0.2% to 15,837.55. The UK FTSE 100 fell 0.5% to 7,254.78. The future of Dow Industrials fell less than 0.1% to 35,786.00. The contract for the S&P 500 was also little changed, slipping less than 0.1% to 4,604.00.

With US inflation at its highest level in three decades, the US Federal Reserve is expected to start this week cutting back the extraordinary stimulus it has given to the economy since the pandemic recession struck early. from last year, a process that could prove to be a risky balancing act.

President Jerome Powell has indicated that the Fed will announce after its policy meeting on Wednesday that it will start cutting its $ 120 billion in monthly bond purchases as early as this month. These purchases aim to keep long-term loan rates low to encourage borrowing and spending.

In Asian trading, the Japanese benchmark Nikkei 225 fell 0.4% to close at 29,520.90. South Korea’s Kospi jumped 1.2% to 3,013.49. The Hong Kong Hang Seng lost 0.2% to 25,099.67, while the Shanghai Composite lost 1.1% to 3,505.63.

The Australian S & P / ASX 200 slipped 0.6% to 7,324.30 after the Reserve Bank of Australia kept its key interest rate move unchanged at an all-time high of 0.1%, but dropped indicated that it was preparing to cut some of its economic support measures.

Stocks rose as investors cheered on better-than-expected corporate earnings despite concerns about the impact of supply chain disruptions and rising inflation on businesses.

More than half of the companies in the benchmark S&P 500 have already published results. Analysts expect overall profit growth of 36% by the end of the report. 167 other companies in the index publish their results this week.

Pharmaceutical giant Pfizer will release its results on Tuesday and the CVS Health results update will be released on Wednesday.

In energy trading, benchmark US crude fell 9 cents to $ 83.96 a barrel in electronic trading on the New York Mercantile Exchange. It gained 48 cents to $ 84.05 on Monday. Brent crude, the international standard, rose 15 cents to $ 84.86 a barrel.

In currency trading, the US dollar fell to 113.66 Japanese yen from 113.98 yen. The euro cost $ 1.1604, compared to $ 1.1607.


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Fed to start restricting economic aid as inflation risk increases

FILE - In this file photo from September 30, 2021, Federal Reserve Chairman Jerome Powell testifies during a House Financial Services Committee hearing on Capitol Hill in Washington.  Powell says the tangled supply chains and shortages that have plagued the U.S. economy since this summer have worsened and will likely keep inflation high next year.  (Sarah Silbiger / Pool Photo via AP, File)

FILE – In this file photo from September 30, 2021, Federal Reserve Chairman Jerome Powell testifies during a House Financial Services Committee hearing on Capitol Hill in Washington. Powell says the tangled supply chains and shortages that have plagued the U.S. economy since this summer have worsened and will likely keep inflation high next year. (Sarah Silbiger / Pool Photo via AP, File)

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With inflation at its highest level in three decades, the Federal Reserve is expected to start this week reducing the extraordinary stimulus it has given to the economy since the pandemic recession hit early last year, a a process that could prove to be a risky balancing act.

President Jerome Powell has signaled that the Fed will announce after its policy meeting on Wednesday that it will start cutting its $ 120 billion in monthly bond purchases as early as this month. These purchases aim to keep long-term loan rates low to encourage borrowing and spending.

Once the Fed ends its bond purchases by mid-2022, then it will turn to a more difficult decision: when to raise its short-term benchmark rate to zero, where it has been since. that COVID-19 hammered the economy in March 2020. Raising this rate, which affects many consumer and business loans, would aim to ensure that inflation does not run out of control. But that would carry the risk of discouraging spending and undermining the labor market and the economy before they regain full health.

“We don’t have a roadmap for what we’re going through,” said Diane Swonk, chief economist at Grant Thornton. Powell must “walk a tightrope” in supporting the recovery without “turning a deaf ear to inflation”.

In this uncertain backdrop, President Joe Biden has yet to announce whether he will reappoint Powell for another four-year term as Fed chairman. Powell’s current term expires in early February, but previous presidents have typically announced such decisions in late summer or early fall.

Biden is expected to offer Powell a second term despite complaints from progressive groups that the president has increased risks to the financial system by easing banking regulations and is not sufficiently committed to considering the economic threats of climate change in the Fed monitoring of businesses. Powell is admired on Wall Street and in most economic circles and has been praised for guiding the economy through the recession, in part thanks to an array of emergency loan programs from the Fed.

The Fed’s likely decision this week to cut bond purchases comes as high inflation disrupts the U.S. economy for much longer than Powell and many other officials initially anticipated. Consumer demand for healthy spending has been met with clogged ports, closed factories and labor shortages that have driven up prices for automobiles, furniture, food, building materials. and household products.

On Friday, the government said prices jumped 4.4% in September from the previous year – the fastest 12-month increase since 1991. There was, however, a sign that inflation could fall: excluding the volatile food and energy categories, prices rose only 0.2% from August to September. This was down a tenth from the previous month’s increase and well below the 0.6% jump in May.

Yet wages and salaries rose the most during the July-September period in at least 20 years, according to a separate report on Friday. This suggests that workers are increasingly able to demand higher wages from companies that are desperate to fill an almost record number of open jobs. Large wage increases can drive inflation up if companies raise prices to cover higher costs.

As inflation escalates, the labor market has not returned to full force. The unemployment rate was 4.8% in September, above its pre-pandemic level of 3.5%. And about 5 million fewer people have jobs now than before the pandemic. Many Americans have not yet stepped off the sidelines to look for work, some of them because they still fear the virus or cannot find or afford child care, others because they have decided to take early retirement.

Powell has said he would like the labor market to show further improvement before the Fed starts raising its short-term key rate. Economists expect him to use the press conference following the Fed’s meeting on Wednesday to point out, as he has done before, that the start of the Fed’s reduction in bond purchases will not begin. does not mean that a rate hike is near.

“I think it’s time to gradually cut back, and I don’t think it’s time to raise rates,” he said about a week ago.

The minutes from the last Fed meeting indicate that the central bank will likely reduce its monthly purchases of Treasury bonds and mortgages by $ 15 billion per month. By cutting bond purchases so quickly, the Fed would have the possibility of raising rates by the second half of 2022.

That doesn’t mean it will. At its last meeting, about half of the Fed’s policymakers predicted that the first rate hike would take place in late 2022, with the other half projecting 2023 or later. The timing of any rate hike will, however, depend on whether inflation is still high and whether the Fed believes the job market is back to full health.

Earlier in the pandemic, Powell had spoken optimistically to help restore the unemployment rate to its pre-COVID level, when it hit a low of 3.5% in 50 years. More recently, however, he and other officials have expressed doubts about the ability of the labor market to fully recover.

It is far from clear if or when the several million Americans who have left the workforce will return. Among the newly unemployed are those who live or work in places, such as inner cities of large urban centers, where jobs may never fully return. If many people have indeed given up on the job market for good, the Fed might decide it can assess sooner than it otherwise would.

“They must now think that the workforce has changed structurally,” said Steve Friedman, economist at asset manager MacKay Shields and a former senior executive at the New York Fed.

However, the risk is that the Fed will end up raising rates too soon. Supply bottlenecks could ease in the coming months. If the Fed were to raise rates at the same time, it could depress spending and weaken the economy just as its supply problems recede.

“We could easily see that demand is slowing just as supply is increasing,” said Randal Quarles, a member of the Fed’s Board of Governors, in a recent speech. “In the worst-case scenario, we could reduce the incentives to return to supply, leading to a prolonged period of sluggish activity.


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Asian equities on the rise, following the Wall Street rally | Economic news

By YURI KAGEYAMA, AP Business Writer

TOKYO (AP) – Asian stocks were mostly higher on Tuesday after another rally to an all-time high on Wall Street.

Stocks rose broadly, with companies releasing much stronger summer earnings reports than analysts had expected. Historically low interest rates, along with strong corporate earnings growth, have helped the S&P 500 more than double from the low reached in March 2020 at the start of the coronavirus pandemic.

On Monday, the S&P 500 rose 0.5% to 4,566.48, breaking a record set Thursday. The Dow Jones Industrial Average also hit a record high, gaining 0.2% to 35,741.15. The Nasdaq composite rose 0.9% to 15,226.71.

In Tuesday’s session, the Japanese benchmark Nikkei 225 rose 1.8% to close at 29,106.01. The advance was helped by a 2.6% jump in electronics and entertainment Sony Corp., which will report profits later this week. Sony, which has video game and film divisions, saw sales increase as people switched to home entertainment during the pandemic.

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Other big winners included Nippon Telegraph & Telephone, which jumped 5.4% after improving its earnings outlook.

“Sentiments in Asia may largely reflect Wall Street’s outstanding performance overnight, while the COVID-19 situation in China remains under scrutiny with enhanced control measures,” said Yeap Jun Rong, strategist of market at IG in Singapore.

China has reimposed travel restrictions in some areas to tackle virus outbreaks that add to concerns over the slowing economy.

Hong Kong’s Hang Seng fell 0.7% to 25,938.50. The Shanghai Composite Index lost 0.4% to 3,594.52.

South Korea’s Kospi gained 1.0% to 3,050.14 after the government said the economy grew at an annual rate of 4%, according to government data. It was a little lower than expected. But analysts expect consumer spending to pick up as virus cases decline with the progress of the vaccine rollout in the country.

The Australian S & P / ASX 200 lost its earlier gains and remained little changed, advancing less than 0.1% to 7,443.40.

On Wall Street, Tesla hit the biggest gain of the S&P 500 after Hertz announced it would buy 100,000 Model 3 vehicles for its fleet. The landmark deal for the electric vehicle industry pushed Tesla up 12.7%. Because it is one of the most important stocks in the market, its movements have a disproportionate effect on the S&P 500.

So far, companies in the S&P 500 have reported third quarter profits that were nearly 46% higher than a year ago. This allowed the companies in the index to post overall growth of around 32.5%, according to FactSet. This compares to expectations of about 27% growth at the end of the third quarter on September 30.

Several of the market’s most influential stocks are expected to post their own earnings over the coming week. This includes Apple, Microsoft, Amazon, and Google’s parent company, Alphabet. Because these are the four biggest companies on Wall Street in terms of market value, their stock movements have a huge effect on the S&P 500, even more so than Tesla’s.

Moderna rose 7% after reporting encouraging data on the use of its COVID-19 vaccine in children.

Shares of energy companies surged after the price of US oil surpassed $ 85 a barrel in the morning. This is the first time this has happened in about seven years, although the price has come down over the day.

Benchmark US crude fell 16 cents to $ 83.60 a barrel in electronic trading on the New York Mercantile Exchange. It closed Monday at $ 83.76 a barrel.

Brent crude, the basis of international prices, gained 1 cent to $ 85.18 a barrel.

Contrary to previous Federal Reserve comments, Fed Chairman Jerome Powell said on Friday that inflation is expected to remain elevated for much of next year amid erased supply chains and shortages. This could put pressure on the central bank to end the record interest rates it is offering to support markets and the economy.

The central bank is preparing to slow down its monthly bond purchases to keep long-term interest rates low in the near future, but a move in short-term interest rates does not appear imminent.

The 10-year Treasury yield remained stable at 1.63%.

In currency trading, the US dollar rose from 113.71 yen to 113.92 Japanese yen. The euro cost $ 1.1605, compared to $ 1.1611.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Are we heading for a stock market crash?

It sounds strange right now, I know. I mean, the FTSE 100 The index hit its highest level in two months on Thursday. As I write this Friday afternoon, it is maintaining those levels.

So why am I talking about a stock market crash?

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UK economy shows weak recovery, FTSE 250 stalls

I am basing myself on the growing risks to the global recovery, which could weigh on the performance of companies and the stock markets.

The latest UK growth figures, weak for August, have been a wake-up call to me. The economy grew only 0.4% month-on-month in August, even after the easing of containment measures. In relation, the FTSE 250 The index, which is roughly representative of the performance of UK-based companies, stagnated last month. This could indicate that the stocks that make it up are not rising fast enough to push the index up.

Lower numbers expected across the pond

And it’s not just the UK where growth is disappointing. investment bank Goldman Sachs has just revised downwards its growth forecasts in the United States. He now expects growth in 2022 to slow from 4.4% to 4%. Economic growth is a reflection of how individual businesses are doing at a collective level. So, the expected weakness of the economy means that we can also expect weaker corporate results.

The United States is the world’s largest economy. So everything that happens in the United States affects the rest of the world as well. Now, the latest forecast cut is hardly scary. But slower growth can be unsustainable for some companies. This can trigger contagion. We have seen this recently in the Chinese context. The near collapse of real estate developer Evergrande caused stock market jolts around the world.

Withdrawal of support

I would not rule out such events any further, especially since the support policies are withdrawn. In the UK, the holiday scheme has been abolished, which could lead to higher unemployment. And the cancellation of the stamp duty holiday could be bad news for the real estate market. This is mainly because the recovery is too weak to sustain it. A handful of real estate developer stocks in the FTSE 100 have supported it well over the past year, as their stock prices have rebounded from soaring house prices. They may not be able to do it now.

Central bank quantitative easing in the form of bond purchases could also be reduced. The US Federal Reserve mentioned this in the context of rising inflation. This could derail any recovery seen so far. And inflation as such is also a big imminent risk.

What i would do now

What I mean is keeping in mind that the stock markets were very nervous until recently, I think any news could trigger them into a crash. This does not mean a catastrophe, it would probably only be a short-term market downturn. Also, I can’t ignore the fact that the FTSE 100 is currently hitting two month highs so the crash might not happen at all. But I would still be prepared for a stock market crash and keep my investment wishlist ready to add stocks to my investment portfolio if their prices drop.

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Stock Indices Close Lower as Jobs Data Stirs Uncertainty | News from USA®

By STAN CHOE, DAMIAN J. TROISE and ALEX VEIGA, AP Business Writers

Wall Street closed a wobbly trading day with a large drop in equities on Friday, after a weak employment report raised questions about the Federal Reserve’s timetable to reduce its immense support for markets.

The S&P 500 fell 0.2% after fluctuating between small gains and losses for much of the day. The modest drop ended a three-day winning streak for the benchmark. Despite that, he managed a 0.8% gain for the week, less than half of the index’s loss last week.

The Dow Jones Industrial Average fell 8.69 points, or less than 0.1%, to 34,746.25, while the Nasdaq composite slipped 74.48 points, or 0.5%, to 14,579, 54.

Wall Street reacted with uncertainty and disappointment to the highly anticipated September jobs report. US stocks fluctuated throughout the day, as did Treasury yields.

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The 10-year Treasury yield climbed to 1.60% from 1.57% Thursday night after initially falling to 1.56% immediately after the jobs report was released.

Small business stocks fell more than the overall market. The Russell 2000 Index lost 17 points, or 0.8%, to 2,233.09.

Much of Wall Street assumed that the job market had improved enough that the Fed soon began to cut back on its monthly bond purchases meant to keep interest rates in the long term. Investors had also asked the central bank to start raising short-term interest rates at the end of next year. The current ultra-low interest rates have been one of the main forces pushing stocks to record highs.

But Friday’s jobs report showed employers created just 194,000 jobs last month, well below the 479,000 economists were expecting. Many investors still expect the Fed to stick to its timetable, but the numbers were low enough to at least raise the question of whether it could wait longer to cut its bond purchases or possibly raise short rates. term.

“The lack of jobs is not pretty – there is no way around it,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial, in a statement. “And many may think that will cause the Fed to pause in terms of the reduction strategy. But the jury is out on how the market will interpret the data.”

Below the surface, the numbers don’t offer much clarity. The unemployment rate fell to 4.8% from 5.1%, and the government has revised upward the hiring figures of recent months. But last month’s hires were still the lowest since December 2020. Average wages also rose a little faster than expected compared to August, helping workers but adding to concerns about inflation.

“This gives the Fed a bit more leeway on cutting and tightening in general,” said Cliff Hodge, chief investment officer for Cornerstone Wealth.

Inflation remains a big concern for investors after hitting its highest level in at least a decade, in part due to booming supply chains as the global economy reboots after its pandemic-caused shutdown. These supply chain issues will be a key focus for investors as they review the next round of quarterly corporate financial reports.

“Profit season is really going to be the next catalyst for the market to figure out where to go until the end of the year,” Hodge said.

Rising energy prices also contributed to inflation, and benchmark US crude for November delivery briefly exceeded $ 80 a barrel early Friday. This is the highest the first-month contract for U.S. oil has been since 2014.

This helped push S&P 500 energy stocks up 3.1%, by far the biggest gain among the 11 sectors that make up the index. Exxon Mobil rose 2.8% and Pioneer Natural Resources 4.6%.

About three in five companies on the S&P 500 closed lower, with losses at tech and healthcare companies accounting for much of the decline. Citrix Systems fell 5.7%, while Bristol-Myers Squibb closed down 3%. Only energy stocks and banks recorded gains.

Friday’s choppy trading continues an already volatile run since the S&P 500 set its record on September 2. A rapid rise in interest rates and the prospect of less support from the Fed has forced investors to reassess if stock prices have risen too expensive. Concerns about rising interest rates have also combined with political unrest in Washington, DC.

The S&P 500 had four consecutive days until Tuesday when it alternated between a 1% gain and a 1% loss. In recent days, the market has been more stable amid relief that Congress appears to be delaying at least one disastrous default on US federal debt.

Overseas exchanges closed unevenly on Friday. In Europe, the German DAX lost 0.3% and the French CAC 40 fell 0.6%. London’s FTSE 100 rose 0.2%.

Asian markets were stronger. Japan’s Nikkei 225 rose 1.3%, South Korea’s Kospi added 0.6%, and shares in Shanghai gained 0.7%.

AP Business Writer Joe McDonald contributed.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Stocks drop in tech, oil hits highest since 2014

People stand near a bank's electronic board showing the Hong Kong Stock Index on the Hong Kong Stock Exchange in Hong Kong on Monday, October 4, 2021. Asian markets were mixed on Monday, while the benchmark index of Hong Kong lost more than 2% after China property developer struggled Evergrande shares were suspended from trading.  (AP Photo / Vincent Yu)

People stand near a bank’s electronic board showing the Hong Kong Stock Index on the Hong Kong Stock Exchange in Hong Kong on Monday, October 4, 2021. Asian markets were mixed on Monday, while the benchmark index of Hong Kong lost more than 2% after China property developer struggled Evergrande shares were suspended from trading. (AP Photo / Vincent Yu)

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Stocks fell sharply on Monday afternoon as Wall Street just had its worst week since the winter. The price of oil hit a seven-year high as OPEC and allied oil producers stuck to a plan to cautiously increase production even as global demand for crude oil increases.

The S&P 500 fell 1.4% at 12:03 a.m. Eastern time. The Dow Jones Industrial Average lost 363 points, or 1.1%, to 33,962.

Losses in tech stocks pushed the Nasdaq down 2.3%. Apple fell 2.5% and Microsoft 2.4%. The big communications companies have also slipped. Facebook fell 4.7%.

US crude oil prices rose 2.6% and topped $ 77 a barrel for the first time since 2014. OPEC and allied oil-producing countries on Monday decided to maintain their cautious approach to restore oil production. reduced oil during the pandemic, agreeing to add 400,000 barrels per day in November.

Natural gas prices jumped 5.7%. Energy companies have increased along with energy prices. Devon Energy rose 3.9%.

The 10-year Treasury yield fell from 1.47% on Friday to 1.48%. The return was 1.31% on September 20 and the recent surge contributed to the weakness in tech stocks. A rapid rise in interest rates has made it necessary to reassess whether stocks have become too expensive, especially the already expensive tech companies.

Investors are increasingly worried about inflation as oil prices rise and companies continue to face supply issues that drive up their costs and force them to raise prices. Wall Street is also worried about the Federal Reserve’s timing to reduce its bond purchases and its possible decision to raise its benchmark interest rate.

“You really have a lot of reasons for the Band to be trading defensively right now,” said Julian Emanuel, chief equities and derivatives strategist at BTIG. “If you’re not going to see the bond market pick up and yields go down, then you’re likely to see more volatility in stocks,” he said.

Investors are also bracing for the latest round of corporate earnings, which will rise over the coming weeks. They are also closely monitoring economic data for more signals on the pace of the recovery as businesses and consumers continue to grapple with the impact of COVID-19 and the highly contagious delta variant.

Wall Street will get more information on the health of the economy this week. On Tuesday, the Institute for Supply Management will release its service sector index for September. The service sector is the largest part of the economy and its health is a key factor for growth.

The Ministry of Labor will release its employment report for September on Friday. The job market is struggling to fully recover from the damage caused by COVID-19 over a year ago.

Tesla rose 1.5% after the electric vehicle maker reported surprisingly good third quarter deliveries.

In Asia, the Hong Kong benchmark fell more than 2% after shares in struggling real estate developer China Evergrande were suspended. Stocks in most European markets edged up.


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Rising bond yields scare investors, deflate tech stocks

People wearing face masks walk past the electronic board of a bank displaying the Hong Kong stock index in Hong Kong on Tuesday, September 28, 2021. Asian stocks fell mainly on Tuesday as concerns over China rocked the bank. investor optimism after mixed results on Wall Street.  (AP Photo / Kin Cheung)

People wearing face masks walk past the electronic board of a bank displaying the Hong Kong stock index in Hong Kong on Tuesday, September 28, 2021. Asian stocks fell mainly on Tuesday as concerns over China rocked the bank. investor optimism after mixed results on Wall Street. (AP Photo / Kin Cheung)

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Tech companies led a large decline in stocks on Wall Street on Tuesday, accentuating the market’s collapse in September.

The S&P 500 fell 2%, its worst drop since May. The tech-rich Nasdaq fell 2.8%, its biggest drop since March. Descenders outnumbered New York Stock Exchange advances 4 to 1.

The benchmark S&P 500 is down 3.8% since the start of the month and on pace with its first monthly loss since January. The September crisis was an exception to a mostly steady stream of gains so far this year, which has pushed the S&P 500 up 15.9% since the start of 2021.

The sell-off came as a rapid rise in Treasury yields is forcing investors to reassess whether prices have been too high for stocks, especially the more popular ones. The yield on the 10-year Treasury bill, a benchmark for many types of loans, including mortgages, jumped to 1.54%. This is its highest level since the end of June and up from 1.32% a week ago.

Bond yields started rising last week after the Federal Reserve sent the clearest signals yet that the central bank is moving closer to start pulling back the unprecedented support it has provided to the economy throughout throughout the pandemic. The Fed has indicated that it may start raising its benchmark interest rate over the next year and will likely start slashing the pace of its monthly bond purchases before the end of this year.

“This is all taking one of the weights that was keeping returns low and removing it,” said Sameer Samana, senior global markets strategist at Wells Fargo Investment Institute. “This clearly has a big impact on large caps, higher growth, multiple stocks.

Higher yields mean Treasuries pay more interest, causing investors to pay less high prices for stocks and other things that are riskier bets than super-safe US government bonds. . The recent rate hike has hit tech stocks particularly hard, as their prices appear to be more expensive than the rest of the market, relative to their earnings.

There have also been many tech stocks recently offered due to expectations of significant earnings growth in the distant future. When interest rates are low, an investor doesn’t lose much by paying high prices for the stock and waiting years for growth to occur. But when Treasuries pay more in the meantime, investors are less willing.

The S&P 500 lost 90.48 points to 4,352.63. The Dow Jones Industrial Average lost 569.38 points, or 1.6%, to 34,299.99. The blue chip index briefly lost 614 points.

Small business stocks also lost ground. The Russell 2000 Index lost 51.23 points, or 2.2%, to 2,229.78.

This week’s slump for the market is reminiscent of an episode earlier this year when expectations of rising inflation and a stronger economy pushed Treasury yields up sharply. The 10-year rate jumped to nearly 1.75% in March after starting the year around 0.90%. Tech stocks were also hit hard by this slowdown.

Chipmaker Nvidia fell 4.4%, Apple slipped 2.4%, and Microsoft fell 3.6%. The wider tech sector is also facing a global shortage of chips and parts due to the virus pandemic and this could worsen as an electricity crisis in parts of China closes factories.

Communication companies have also weighed on the market. Facebook and Google’s parent company Alphabet each fell 3.7%.

Energy was the only sector in the S&P 500 that was not in the red. Exxon Mobil rose 1% and Schlumberger gained 2.4% for the biggest gain among S&P 500 stocks.

Another lingering concern in the market originating in China is the possible collapse of one of China’s largest real estate developers. Evergrande Group is fighting to avoid default on billions of dollars in debt.

Asian markets were mixed while European markets fell.

Investors faced a turbulent market in September as they tried to assess the progress of the economic recovery and its impact on various industries.

COVID-19 remains a persistent threat and continues to wreak havoc on businesses and consumers. Economic data on consumer spending and the labor market are mixed. US consumer confidence fell for the third consecutive month in September, according to a Conference Board report.

Companies warn that supply chain issues and rising prices could hurt sales and profits. The Federal Reserve has maintained that the rise in inflation is temporary and linked to these supply chain issues as the economy recovers from the pandemic. Investors continue to fear that higher inflation may no longer be permanent, and rising bond yields reflect some of these concerns.

“At the end of the day, the supply chain thesis is really tested and the Fed, businesses and consumers have had to react to some of the realities on the ground,” said Eric Freedman, chief investment officer at US Bank Wealth Management. .


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Stocks end mixed as big tech losses weigh in on the market

People wearing face masks walk past a bank's electronic board displaying the Hong Kong Stock Index on the Hong Kong Stock Exchange in Hong Kong on Monday, September 27, 2021. Asia's share rose on Monday, but skepticism about The region's economic outlook has tempered the recovery amid worries about new waves of COVID-19 outbreaks.  (AP Photo / Vincent Yu)

People wearing face masks walk past a bank’s electronic board displaying the Hong Kong Stock Index on the Hong Kong Stock Exchange in Hong Kong on Monday, September 27, 2021. Asia’s share rose on Monday, but skepticism over The region’s economic outlook has tempered the recovery amid worries about new waves of COVID-19 outbreaks. (AP Photo / Vincent Yu)

PA

Major Wall Street stock indexes ended mixed on Monday, with losses at tech and healthcare companies outpacing gains elsewhere in the market.

The S&P 500 fell 0.3% after spending much of the day essentially flat. The pullout ended a three-day winning streak for the benchmark, which last week recorded its first weekly gain in three weeks.

The high-tech Nasdaq composite fell 0.5%, while the Dow Jones Industrial Average managed a gain of 0.2%. Smaller company stocks outperformed the market as a whole, pushing the Russell 2000 index up 1.5%.

Bond yields have generally increased. The 10-year Treasury yield rose to 1.49% from 1.46% on Friday night. It was at 1.31% a week ago, as market nervousness prompted investors to move money into bonds, reducing their yield but increasing since Tuesday.

Banks made solid gains on the rise in the 10-year Treasury yield. The yield influences the interest rates on mortgages and other consumer loans, so when it rises, it allows lenders to charge higher rates. Bank of America gained 2.7%.

“The story now is higher bond yields and what areas of the (stock) market are benefiting,” said Willie Delwiche, investment strategist at All Star Charts.

The S&P 500 lost 12.37 points to 4,443.11, the Nasdaq lost 77.73 points to 14,969.97 and the Dow gained 71.37 points to 34,869.37. The Russell 2000 gained 32.93 points to 2,281, a sign that investors are still confident about future economic growth.

Markets have had a turbulent month so far and the S&P 500 is set to lose 1.8% in September, which would mark the first monthly loss since January. Investors have tried to gauge how much room for growth the economy has amid waves of COVID-19 that are dragging down consumer spending and job growth, while inflation remains a concern.

The economic recovery started strong in 2021, but analysts and economists have tempered their forecasts for the rest of the year. In a survey released on Monday, the National Association for Business Economics found that its panel now expects full-year economic growth of 5.6%, down from a forecast for 6.7% growth in the NABE’s previous survey in May. However, economists raised their economic growth forecast for 2022 to 3.5% from a previous forecast of 2.8%.

Consumer spending has been the main driver of the economic recovery and it has been partly held back by the increase in COVID-19 cases due to the highly contagious delta variant. Investors will get a glimpse of how this could continue to play out on Tuesday when the Conference Board releases its Consumer Confidence Index for September.

Wall Street has faced an otherwise quiet period for corporate reporting as companies prepare to release their latest quarterly results in the coming weeks. The next round of corporate statements could give investors a better idea of ​​the real impact of the supply chain and labor disruption on sales and profits.

Microsoft fell 1.7% and Apple fell 1.1% as technology stocks helped push the S&P 500 down. The technology sector, which is disproportionately heavy in the index, fell 1% overall.

Healthcare stocks also weighed on the market. Moderna lost 5% and Abbot Laboratories lost 3.1%.

The benchmark US crude oil price rose 2% and supported gains in energy stocks. Exxon Mobil rose 3%.

Bank stocks reacted to the surge in bond yields. The KBW Bank index rose more than 9% in four days.

The exception on Monday was Wells Fargo, which fell 0.8%. The bank has solved its latest legal headache by agreeing to pay $ 37 million for allegations of overbilling customers using its foreign exchange services.

The bank has been embroiled in numerous scandals over the past few years and still operates under an order from the Federal Reserve that prevents Wells from expanding. Senator Elizabeth Warren of Massachusetts published a letter this month calling for the dissolution of Wells Fargo, citing the bank’s inability to resolve its problems.

European markets edged up while Asian markets were mixed.


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shares win as Evergrande says it will make interest payment | Economic news

By ELAINE KURTENBACH, AP Business Writer

Global equities and US futures rose on Wednesday after Chinese developer Evergrande announced plans to pay interest on its debt which is due on Thursday.

Shares rose in Paris, Frankfurt and Shanghai but fell in Tokyo.

Markets have been rocked by Evergrande’s struggle to cope with debt payments and uncertainty over what the Chinese government could do to limit the impact of a possible default.

Evergrande, one of China’s largest private sector conglomerates, said it will make a payment on Thursday on a 4 billion yuan ($ 620 million) bond denominated in Chinese yuan.

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A statement from the company did not say whether this involved a change in payment. The bond has an interest rate of 5.8%, which would make the normal amount owed at 232 million yuan ($ 36 million) for one year.

Evergrande gave no information on any future payments, including a US dollar-denominated bond in March.

“Although banks have yet to declare Evergrande in technical default, Beijing’s silence adds to market nervousness,” Mizuho Bank’s Venkateswaran Lavanya said in a comment.

The German DAX gained 0.6% to 15,444.30 and the CAC 40 in Paris gained 1.2% to 6,630.19. The FTSE 100 in London jumped 0.9% to 7,042.98. US futures were also higher, with the Dow Industrials contract rising 0.6%. The future of the S&P 500 gained 0.4%.

The 10-year Treasury yield remained stable at 1.33%, against 1.32% on Tuesday night.

In Asia, Tokyo fell, but other major regional benchmarks were mostly higher, reducing initial losses.

The Bank of Japan kept its ultra-support monetary policy unchanged, as expected.

The Tokyo Nikkei 225 Index lost 0.7% to 29,639.40, while the Shanghai Composite Index gained 0.4% to 3,628.49. The Australian S & P / ASX 200 gained 0.3% to 7,296.90. Shares fell 2% in Taiwan and also fell in Singapore. But benchmarks have increased in India, Indonesia and Malaysia.

The markets in South Korea and Hong Kong were closed for holidays.

The Federal Reserve is expected to send out its clearest signal yet this week that it will begin to curb its ultra-low interest rate policies later this year, the first step towards unwinding the extraordinary support it has provided. to the economy since the pandemic hit 18 months ago.

Wednesday’s Fed policy meeting could lay the groundwork for a November pullback announcement.

On Tuesday, nerves appeared to stabilize after a massive sell-off on Monday.

The S&P 500 was down 0.1% and the Dow Jones Industrial Average was down 0.1% as well.

The Nasdaq composite rose 0.2% and small business stocks also managed gains. The Russell 2000 Index rose 0.2%.

In other exchanges, the US benchmark crude oil gained $ 1.04 to $ 71.53 per barrel in electronic trading on the New York Mercantile Exchange. He won 35 cents to $ 70.49 on Tuesday.

Brent crude oil, the standard for international prices, added 98 cents to $ 75.34 a barrel.

The US dollar climbed to 109.42 Japanese yen from 109.23 yen on Tuesday night. The euro strengthened to $ 1.1732 from $ 1.1726.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Asian Stocks Extend Losses As China Worries About Darkening Sentiment | Economic news

By YURI KAGEYAMA, AP Business Writer

TOKYO (AP) – Asian stocks fell on Tuesday, Tokyo down 2% as concerns over heavily indebted Chinese real estate developers weighed on sentiment.

On Monday, US stocks posted their biggest drop since May, with the highly technical Nasdaq composite slumping 2.2%.

Markets were closed Tuesday in Taiwan, Shanghai and South Korea.

In Hong Kong, the Hang Seng fell 0.5% to 23,971.73 as sales from real estate developers slowed.

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The Nikkei 225 lost 601.48 points to 29,898.57. The Australian S&P ASX 200 slipped 0.1% to 7,244.80.

Analysts said fears that the damage caused by a real estate crisis in China would spill over into the world were based on memories of past financial crises such as the bursting of the Japanese economic “bubble” or the crisis. subprime mortgages in 2008.

In Japan, this disaster is called the Lehman Crisis for the collapse of Lehman Brothers in 2008 which made the situation worse.

“The whisper is that this could be China’s ‘Lehman moment’. Even with the Chinese markets closing until Wednesday, we are seeing massive sales around the world, ”RaboResearch said.

The S&P 500 fell 1.7% on Monday to 4,357.73, its biggest drop since May. The S&P 500 was emerging from two weeks of losses and is on track for its first monthly decline since January.

The Dow Jones Industrial Average fell 1.8% to 33,970.47. The Nasdaq lost 2.2% to 14,713.90. The Russell 2000 fell 2.4% to 2,182.20.

Tech companies have led the market as a whole to the downside. Apple fell 2.1% and chipmaker Nvidia fell 3.6%.

Airlines were among the few bright spots. American Airlines rose 3% to dominate all S&P 500 winners. Delta Air Lines rose 1.7% and United Airlines added 1.6%.

“What has happened here is that the list of risks has finally become too long to ignore,” said Michael Arone, chief investment strategist at State Street Global Advisors. “There is just a lot of uncertainty at a difficult seasonal time for the markets.”

Concerns about Chinese real estate developers and debt have recently focused on Evergrande, one of China’s largest real estate developers, which appears to be unable to repay its debts.

These real estate companies have been major engines of China’s economy, which is the second largest in the world.

If they fail to repay their debts, the heavy losses suffered by investors who hold their bonds would raise concerns about their financial strength. These bondholders could also be forced to sell other independent investments to raise funds, which could hurt prices in seemingly independent markets.

It’s a product of how global markets have become tightly connected, and it’s a concept the financial world calls “contagion.”

Many analysts say they expect the Chinese government to prevent such a scenario, and that it doesn’t sound like a Lehman-type moment. Still, any hint of uncertainty may be enough to upend Wall Street after the S&P 500 has climbed almost uninterruptedly since October, leaving stocks looking expensive and with less margin for error.

In addition to these concerns, investors are watching to see if the Federal Reserve could ease off on its support for the economy. And heavy government spending to counter the impact of the pandemic has increased the likelihood that Congress will opt for a destructive chicken game before allowing the US Treasury to borrow more money.

The Fed is due to release its latest update on economic policy and interest rates on Wednesday.

In energy trading, benchmark US crude rose 61 cents to $ 70.90 a barrel. Brent crude, the international standard, added 57 cents to $ 74.49 a barrel.

In currency trading, the US dollar added 10 cents to 109.49 Japanese yen. The euro cost $ 1.1740, compared to $ 1.1726.

AP Business Writers Damian J. Troise, Stan Choe and Alex Veiga contributed.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Strong Jobs Report Sends Most Stocks, Bond Yields Higher | News from USA®

By STAN CHOE, DAMIAN J. TROISE and ALEX VEIGA, AP Business Editors

Treasury yields rise on Friday and stock indexes hold close to their all-time highs on Wall Street after a report showed the US labor market is improving broadly.

The S&P 500 rose 0.2%, a day after hitting a new all-time high. The Dow Jones Industrial Average was up 152 points, or 0.4%, at 35,218 at 2:22 p.m. EST, and the Nasdaq composite was down 0.5%.

Every major clue is on track for a weekly gain after slipping last week.

One of the most marked actions has occurred in the bond market, where Treasury yields tend to move with expectations for the economy and inflation. The 10-year Treasury yield climbed to 1.29% from 1.21% Thursday night, recouping all the losses it suffered over the past week.

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Yields surged as economists said Friday’s encouraging jobs report would give the Federal Reserve another boost to cut back on its bond buying program, which tries to boost the economy by maintaining low long-term rates. Economists believe that an announcement by the Fed on a possible slowdown in purchases could come as soon as the end of the month.

Friday’s jobs report showed hiring was stronger than economists had expected, with employers adding 943,000 workers to their payrolls. Average wages also jumped 4% in July from a year earlier, more than economists had expected.

Most stocks on Wall Street rose on the report, with companies with earnings most closely tied to a strong economy leading the way. S&P 500 financials rose 2.1% and materials companies rose 1.4%.

“Now the growth appears to be on pretty solid ground,” said Sameer Samana, senior global markets strategist at the Wells Fargo Investment Institute.

The strong jobs report and expectations of a labor market recovery could prompt investors to look to companies that are ready to take advantage of higher exits and spending, including airlines, retailers, restaurants and other businesses providing in-person services, Samana said.

Better-than-expected economic data has gained momentum in tech stocks, which have been among Wall Street’s biggest winners since the pandemic.

They were the big beneficiaries of the ultra-low interest rates that the Federal Reserve introduced. When bonds earn little interest, investors are willing to pay higher prices for other types of investments, especially stocks of companies that are expected to grow earnings in the distant future.

A rise in interest rates could undermine these stocks, or at least add a headwind that has been largely absent for over a year. A slowdown in bond purchases by the Fed would be the first step towards raising short-term interest rates from their all-time low of near zero.

This is why the Nasdaq struggled more than the other indices on Friday. This is also why the benchmark S&P 500 was only making apathetic movements, even though three out of five stocks within the index were up.

Apple, Microsoft, Nvidia and other tech stocks account for 28% of the S&P 500 in market value, more than double the weight of any of the 10 other sectors that make up the index. That doesn’t even include some big tech-focused companies like Amazon and Tesla.

These five companies were the biggest weightings in the S&P 500.

The S&P 500’s biggest gain came from Corteva, an agricultural company spin-off from DowDuPont. It jumped 8.1% after reporting higher revenues and profits for the last quarter than Wall Street expected.

This has been the norm for this earnings season. Almost 90% of S&P 500 companies told investors how much they earned in the spring, and their profits were about double what they were a year ago.

AP Business Writer Joe McDonald contributed.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Fed predicts earlier timeline for rate hikes with rising inflation

Washington – The Federal Reserve signaled on Wednesday that it could act sooner than expected to start slowing down low interest rate policies that helped fuel a rapid rebound from the pandemic recession but which also coincided with a rise in l ‘inflation.

Fed policymakers predict that they will twice increase their short-term benchmark rate – which affects many consumer and business loans, including mortgages and credit cards – by the end of this year. 2023. They had previously estimated that no rate hike would take place before 2024.

Speaking at a press conference, President Jerome Powell said the Fed’s policy-making committee has also started discussing when to cut back on its monthly bond purchases. But Powell made it clear that the Fed has yet to decide when it will. The purchases, which consist of $ 120 billion in Treasury bonds and mortgages, are aimed at keeping long-term rates low to encourage borrowing.

The Fed has made it clear that its first step in slowing its support for the economy would be to reduce its bond purchases – and that it would not start raising rates until soon after. Its key rate has been close to zero since March 2020.

The central bank‘s new forecast for rate hikes from 2023 reflects an economy growing faster than expected earlier this year.

At the same time, Powell sought Wednesday to allay any concerns that the Fed may be in a hurry to withdraw economic support by making borrowing more expensive. The economy, he said, still hasn’t improved enough to curb the pace of monthly bond purchases, which the Fed said it intends to continue until “further progress substantial “has been achieved towards its employment and inflation targets.

“We’re a long way from further substantial progress, we think,” Powell said at his press conference. “But we are making progress.

Shortly after the Fed released its statement on Wednesday, US stocks fell further from their record highs and bond yields rose. The yield on the 10-year Treasury bill fell from 1.48% to 1.55%.

Sung Won Sohn, an economist at Loyola Marymount University in Los Angeles, suggested that the initially negative market reaction to the Fed’s statement may have prompted Powell to adopt a more conciliatory tone at his press conference. (“The doves,” in the Fed’s parlance, generally focus on the Fed’s mandate to maximize employment and worry less about inflation. The “hawks,” on the other hand, tend to be concerned. more of the need to avoid high inflation.)

“We received two different messages from the Fed today,” Sohn said. “The interest rate projections were a little more hawkish than the market expected.”

But during his press conference, said Sohn, Powell “stressed that the economy is still not where it should be, especially in terms of unemployment…. and the Fed still thinks the economy needs a boost from the central bank.

Yet Powell also sketched a broadly optimistic picture in his remarks on Wednesday. The inflation spikes of the past two months, he said, will likely prove temporary, and hiring is expected to accelerate throughout the summer and fall as COVID-19 recedes further with the increase in vaccinations. This will allow schools and daycares to reopen, allowing more parents to work, while additional federal assistance for the unemployed ends.

“There are all reasons,” said Powell, “to think that we will (soon) be in a labor market with very attractive numbers, low unemployment, high participation and rising wages at all. levels”.

His comments suggest that the Fed chairman is not worried that this spring’s hires, while strong, are below expectations. Powell had said in early spring that he would like to see a “string” of hiring reports showing about 1 million additional jobs each month. The labor market has yet to reach that total in a month of this year, although employers have posted a record number of open jobs.

At the same time, inflation has risen much faster than Fed policymakers expected in March. Inflation jumped to 5% in May from the previous year – the biggest 12-month increase since 2008.

The increase was in part due to a huge increase in used car prices, which have skyrocketed as semiconductor shortages have slowed vehicle production. Significantly higher prices for car rentals, plane tickets and hotel rooms were also major factors, reflecting pent-up demand as consumers move away from the large purchases of goods that many of them had made. while they had stayed at home to spend on services.

Powell has stuck to his long-held view that these spikes will only have a temporary impact.

“The prices that drive higher inflation come from categories that are directly affected by the recovery from the pandemic and the reopening of the economy,” he said. “Prices that have been rising very quickly due to shortages and bottlenecks etc. should stop rising. And at some point, they should in some cases go down. “

The central bank on Wednesday raised its inflation forecast to 3.4% by the end of this year, from 2.4% in its previous projection in March. Still, officials predict that price increases will remain moderate over the next two years.

Fed officials also expect the economy to grow by 7% this year, which would be the fastest expansion of the calendar year since 1984. They expect growth to slow down thereafter. , to 3.3% in 2022 and 2.4% in 2023.

Economists generally expect the Fed to continue discussing reducing its bond purchases, and then – by the end of August or September – to state precisely how and when it would start. This would pave the way for a reduction in bond purchases that would actually start towards the end of this year or early 2022.

Another key consideration for the Fed is whether inflation persists long enough to affect public behavior. If Americans start to expect price increases, those expectations can trigger a self-fulfilling cycle as workers demand higher wages, which, in turn, can cause their employers to keep raising prices. to offset their higher labor costs.

Powell said measures of long-term inflation expectations have increased in recent months, after falling at the start of the pandemic. But most of them remain within a range consistent with the Fed’s 2% inflation target.

“It’s gratifying to see them come out of their pandemic lows,” he said.

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AP Economics writer Martin Crutsinger contributed to this report.


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Fed’s Evans says disappointed with Treasury decision to end emergency lending programs

Charles Evans, Chairman of the Federal Reserve Bank of Chicago, speaks at a conference at the Federal Reserve Bank of Chicago on June 04, 2019

Scott Olson / Getty Images

Chicago Federal Reserve Chairman Charles Evans said on Friday he was disappointed the Treasury Department decided not to extend some Fed emergency loan programs to small businesses and municipalities, which have acted as a buffer during COVID-19 closures.

“Our facilities have been very helpful – they play a supporting role when markets are in a more difficult situation,” Evans said in an interview on CNBC.

Read: What’s next for markets after Treasury Secretary Steven Mnuchin pulls out $ 455 billion hold

“This supporting role could be important for a while, so it’s disappointing,” Evans said.

The decision itself was no surprise. But the timing of Mnuchin’s decision to end the programs was unexpected, said Ian Katz, director of Capital Alpha Partners.

Mnuchin could have waited a few more weeks to see the latest economic data.

The Fed’s response was swift and forceful. In a statement, the Fed said it would have preferred the full suite of programs to continue.

“It was the first time since – well, we don’t remember another time – that the Fed was so blatantly at odds with the Treasury,” Katz said.

In the interview, Evans said he was “optimistic” that the Treasury and the Fed would continue to work closely together.

Stock index futures indicated a weaker opening on Friday. The Dow Jones Industrial Average DJIA,
-0.31%
rose 44 points on Thursday.

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AIG Pension Services Study Finds High Awareness But Minimal Understanding of Civil Service Loan Forgiveness Program

HOUSTON – () – AIG Retirement Services, a leading provider of retirement plans for tax-exempt and public sector employers, today announced the results of a new study on how employees of organizations Nonprofit and public service are considering student loan debts, student loan forgiveness and the Public Service Loan Forgiveness Program (PSLF).

Millions of public sector and nonprofit workers, including teachers, healthcare workers and first responders, may be eligible for a student loan forgiveness through the PSLF, but confusion around the program appears to be undermining its efficiency. While 90% of public service employees with debt at the college level indicate that they are familiar with the program, 70% presents only a minimal understanding of its rules and requirements.

This gap is significant because more than one in six American adults has a federal student loan, according to the most recent figures from the New York Federal Reserve’s Center for Microeconomic Data released in 2018.1 The Federal Reserve estimates the total student debt to be $ 1.7 trillion,2 and $ 500 billion in new debt will be incurred over the next five years, according to a 2020 Congressional Budget Office report.3

“The Public Service Loan Forgiveness program is a powerful tool for Americans who have chosen to dedicate their careers to service and community,” said Rob Scheinerman, CEO of AIG Retirement Services. “It is encouraging to see a high level of awareness of this important program, but worrying to see such a high level of confusion around the rules and requirements. There is a great opportunity to fill this knowledge gap and help public service employees manage their student loan debt and improve their financial security.

Student Loan Debt The Main Cause Of Financial Stress; PSLF a financial lifeline for public sector employees

Student debt ranks as the number one cause of financial stress for public service employees who have taken out loans from their college years. Almost eight in ten (78%) characterize student debt as a major financial burden. In addition, two out of three (66%) point to student loans and the corresponding monthly payments as a financial worry, surpassing the second highest concern by a whopping 22 percentage points (credit card debt at 44%).

With these concerns as a backdrop, public service employees see the PSLF program as an essential lifeline to their financial well-being. More than one in three (34%) say that this will be the only way for them to pay off their debt within a reasonable time, and 64% say it will reduce financial stress.

Additionally, a significant number of public service employees would use money otherwise spent on monthly student loan payments for other important financial responsibilities – more than half (51%) say they would most likely use the funds to pay off other debts; 47% contribute to retirement savings and investments; and 43% would add to their emergency savings fund.

Despite support for the PSLF, obstacles to the program persist

The PSLF program is clearly supported, with 68% respondents indicating that they are likely or very likely to work to reach their qualifications. Three out of four (77%) expect to tell others about the program, and 84% find the program attractive with half of those who say it is very attractive.

But despite this enthusiasm, there are significant barriers to successful participation in the program. Survey respondents indicate that the main obstacle to canceling the loan through the PSLF is confusion about the program (34%). Other challenges are maintaining the qualification over time (34%) and the number of payments required (31%).

The PSLF program’s own reports show how these expected hurdles played out, as the vast majority of program applicants saw their efforts to request a loan forgiveness rejected. As of November 30, 2020, the Ministry of Education reports that less than 3% of those who requested PSLF program relief have been approved.4

Opportunity for Public Service Employers to Improve Employee Financial Security

Despite these obvious challenges, opportunities remain. Public service employers have an important opportunity to help their employees take control of their student loan debt. Only 12% of public sector employees with student debt receive information from their employer about the public service loan forgiveness program.

AIG Retirement Services, in collaboration with social impact technology company Savi, last year launched an online tool that public sector employers can provide to their employees to streamline the forgiveness process. The end-to-end digital solution helps determine qualification for student loan cancellation, calculate potential savings, navigate the enrollment process, and maintain program eligibility.

“We understand the long-term impact student debt can have on financial security and retirement, which is why we are proud to work with Savi to help employers empower their employees to take control. their student debt, ”Scheinerman continued. “The new program can chart a course for employees of nonprofits and the civil service towards loan cancellation, helping to improve their financial futures and creating more flexibility around other goals,” including savings for retirement. ”

Methodology of the study

The AIG Retirement Services survey was conducted by Dynata and conducted in October and November 2020, drawing responses from 664 public sector employees, ages 21 to 67, on federal student loans for which they make payments themselves. and working at least 30 hours per week. in government, health care, education and the nonprofit field.

To see more student loan forgiveness survey results and related analysis, visit lifeandretirement.aig.com/employers/lp/the-public-service-loan-forgiveness.

1 Microeconomic Data Center, Federal Reserve Bank of New York, https://www.newyorkfed.org/microeconomics/topics/student-debt

2 Consumer credit G.19. Federal Reserve. https://www.federalreserve.gov/releases/g19/current/default.htm

3 Income-Based Student Loan Repayment Plans: Budget Costs and Policy Options. Congress Budget Office. https://www.cbo.gov/system/files/2020-02/55968-CBO-IDRP.pdf

4 Federal Student Aid Portfolio Summary, Office of Federal Student Aid, US Department of Education, https://studentaid.gov/data-center/student/portfolio

About AIG Retirement Services

For more than half a century, AIG Retirement Services has been a leading provider of defined contribution pension plans for tax-exempt employers and the public sector, including healthcare, Kindergarten to 12th grade. year, higher education, government, religious organizations, charities and other non-profit organizations. AIG Retirement Services manages over $ 100 billion in total assets and manages thousands of plans serving approximately 1.8 million plan members. It includes the VALIC family of companies: The Variable Annuity Life Insurance Company and its subsidiaries, VALIC Financial Advisors, Inc. and VALIC Retirement Services Company. Additional information can be found at www.aig.com/RetirementServices.

About AIG

American International Group, Inc. (AIG) is a leading global insurance organization. AIG member companies provide a wide range of property and casualty insurance, life insurance, retirement solutions and other financial services to clients in approximately 80 countries and jurisdictions. These diverse offerings include products and services that help businesses and individuals protect their assets, manage risk and keep their retirement secure. AIG’s common stock is listed on the New York Stock Exchange.

Additional information about AIG is available at www.aig.com | Youtube: www.youtube.com/aig | Twitter: @AIGinsurance www.twitter.com/AIGinsurance | LinkedIn: www.linkedin.com/company/aig. These references along with additional information about AIG have been provided for convenience and the information contained on those websites is not incorporated by reference in this press release.

AIG is the trade name for the global P&C, life and pension and general insurance business of American International Group, Inc. For more information, please visit our website at www.aig.com. All products and services are produced or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all countries and jurisdictions, and coverage is subject to the requirements of underwriting and the wording of the policy. Non-insurance products and services may be provided by independent third parties. Some damage coverage may be provided by a surplus line insurer. Surplus line insurers generally do not participate in state guarantee funds and policyholders are therefore not protected by these funds.

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