- US stocks closed lower Wednesday after Federal Reserve officials agreed to keep policies in place.
- While most officials saw developments, they wanted some time to be more convinced of progress.
- The stimulus package of President Biden forced the Fed to lift its growth and inflation forecast in March.
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US stocks closed lower Wednesday after Federal Reserve officials agreed to keep policies in place – sticking to near-zero interest rates and monthly bond purchases – during the last meeting of the Federal Open Market Committee meeting in March, even as the economy showed clear signs of a rebound.
Officials, according to the minutes released Wednesday afternoon, indicated that policies will not change simply on forecasts alone. While most of the 18 officials saw developments, they wanted some time to be more convinced of progress, such as stronger employment.
“While generally acknowledging that the medium-term outlook for real GDP growth and employment had improved, participants continued to see the uncertainty surrounding that outlook as elevated,” the minutes said.
The landmark $1.9 trillion stimulus package from President Joe Biden in early March has forced Fed officials to lift their growth and inflation forecast before the meeting.
The big message from the Fed minutes is that the central bank is as unconcerned in private about inflation as it is in public,” Brad McMillan, chief investment officer for Commonwealth Financial Network, told Insider. “There appears to be no hidden interest in higher rates, suggesting that rates will indeed remain low until unemployment drops down to pre-pandemic levels.”
The US economy has rebounded faster than what most have expected due in large part to President Joe Biden’s landmark $1.9 trillion stimulus package paired with steady vaccine rollout throughout the country, which has helped the labor, manufacturing, and travel sectors recover. The President on Tuesday moved up the timeline for all American adults to be eligible for a COVID-19 vaccine to April 19 from May 1.
The 10-year Treasury yield has held steady at 1.67% after climbing to the highest levels in over a year in March.
“The fact that the bond yields barely changed last week despite a raft of strong economic numbers … indicates that market has already gone a long way to pricing in the economic rebound,” Kathy Jones, Charles Schwab chief fixed income strategist, said in a note. “Also, it is hard to see U.S. yields surge from here since they are so far above those in many other developed markets in both real and nominal terms. With the current wide yield spread, foreign investors should find U.S. yields attractive.”
Mike Owens, sales trader at Saxo Markets, also said the Fed minutes might give better insight on how members envision the economic recovery and when they expect to hike rates.
“If 5-year US Treasury yields break above 1%, they might provoke a squeeze that could send 10-year yields on a fast track to 2%,” he said.
US shares closed lower Tuesday, with the Dow Jones Industrial Average and S&P 500 retreating from record highs reached the previous session. New sell-offs linked to the Archegos Management Capital crisis added to unease in markets even after US data revealed the economic rebound is on track.
Here’s where US indexes stood after the 4:00 p.m. ET close on Wednesday:
Mobile-gaming company AppLovin is targeting a $30 billion valuation for its US initial public offering, with plans to raise as much as $2.13 billion, Reuters first reported. AppLovin, backed by private equity firm KKR, is looking to sell 25 million shares between $75 to $85 each.
The Singapore-based ride-hailing and delivery giant Grab is reportedly set to list in the US via a SPAC merger with Altimeter Growth Corp. The deal values the combined entity at $35 billion, according to The Financial Times.
Oil prices climbed on optimistic economic data.
West Texas Intermediate crude rose by 0.39% to $59.56 per barrel. Brent crude, oil’s international benchmark, was also up 0.38% to $62.98 per barrel. Oil prices dropped earlier in the week when the Organization of the Petroleum Exporting Countries, or OPEC, said that it will add about two million barrels of oil each day to the market from May to July, easing production cuts.
Bitcoin slipped 4.19% to $55,757.76 as the rally stalls. Sellers outweighed buyers of bitcoin, and the selling spilled over to other cryptocurrencies. Last week, bitcoin flirted with the $60,000-level.
Investor participation in the world’s most popular cryptocurrency soared in the first quarter of 2021 with most of the growth coming from retail investors, according to research from CoinDesk.
Coinbase revenue soared more than 800% year-on-year in the first quarter of this year, the company revealed on Tuesday. This led DA Davidson to reiterate its Buy rating on the company and increase its price target by 125% to $440. Its previous price target for Coinbase was set at $195. Coinbase is set to directly list on the Nasdaq exchange on April 14.
Gold rose to 0.47% to $1,736.50 per ounce.