US stocks wobble, hover near record highs on cautious optimism

By Damian J. Troise and Alex Veiga

Stocks wobbled between small gains and losses in trading on Wall Street overnight, hovering around their record highs as investors remain cautiously optimistic about the recovery of the world’s largest economy.

Vaccine distribution has been ramping up across the US, and President Joe Biden has bumped up his deadline for states to make doses available to all adults by April 19. The vaccines are helping to fuel a recovery, but the virus is still very much a threat as variants are discovered and threaten additional lockdowns.

Investors were waiting for the minutes from the Federal Reserve’s latest meeting on interest rate policy, but the release didn’t contain any market-moving news.
Investors were waiting for the minutes from the Federal Reserve’s latest meeting on interest rate policy, but the release didn’t contain any market-moving news.Credit:NYSE

The S&P 500 was up 0.1 per cent as of 3:22 pm local time (5:22am AEST). Technology, communication and financial companies were helping to lift the market. Those gains were kept in check by a pullback in industrials, materials and health care stocks. The Dow Jones Industrial Average was little changed, and the Nasdaq was flat after having been down 0.3 per cent in the early going.

The yield on the 10-year Treasury inched up to 1.66 per cent after moving up and down for much of the day. A sharp increase in bond yields since the beginning of the year reflects a growing concern among investors that inflation could return as economic growth heats up and the US pulls out of its pandemic-induced recession. Higher yields can slow down the economy by making it more expensive for people and businesses to borrow money.

The stock indexes were little changed following the release of minutes from the Federal Reserve’s latest meeting on interest rate policy.

The minutes revealed that Fed officials were encouraged last month by evidence the US economy was picking up, but they showed no sign of moving closer to ending their bond purchases or lifting their benchmark short-term interest rate from nearly zero.

Fed policymakers also said they expect inflation will likely rise in the next few months because of supply bottlenecks, but they believe it will remain near their 2 per cent target over the longer run.

“Nothing was all that surprising from the minutes,” said Stephanie Roth, senior markets economist at JP Morgan Private Bank. “The Fed is watching closely, not just the unemployment rate, but they’re really focusing on bringing back the population that has fallen out of the labour force.”

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The minutes are from a Fed meeting that came before last week’s March jobs report, which showed a surprisingly strong 916,000 positions were added in the US that month, the most since August, and the unemployment rate fell to 6 per cent from 6.2 per cent.

The broader market has been mostly subdued since the S&P 500 reached another record high on Monday. Stocks within the index are just about evenly split between gainers and losers.

Analysts expect the recovery to continue, but they also expect the market remain choppy as investors shift money to companies and industries that stand to benefit as the pandemic eases.

Carnival, which essentially shut down during the pandemic, rose 2.8 per cent. The cruise operator said bookings have picked up. Other cruise line operators also gained ground as they plan to restart operations.

In Europe, France’s CAC 40 fell less than 0.1 per cent, Germany’s DAX fell 0.2 per cent, and Britain’s FTSE rose 0.9 per cent. Markets in Asia were mixed.

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Source: Thanks smh.com