Comments from Dr. Anthony Fauci regarding Covid-19 influenced investor behavior on Friday.
Momentum struggled Friday, as the Dow Jones faded after Dr. Fauci poured cold water on President Trump’s coronavirus optimism. The decline was short-lived, however, as the Dow roared back in afternoon trading.
After a volatile session, the Dow Jones Industrial Average broke sharply higher in afternoon trading, gaining 183 points or 0.6%. The S&P 500 Index rose 0.2%, but weaker tech shares weighed on the Nasdaq, which fell 0.6%.
It was a quiet day for U.S. economic data, as CPI was the only high-profile release on deck. A stronger uptick than forecast in both core and headline inflation had little impact on Treasury yields, as most of the increase came from a massive spike in used car prices.
Equity markets wavered earlier in the day after the White House’s top virologist Anthony Fauci disputed President Trump’s comments that the nation had “turned a corner.” Fauci pushed back on this idea, citing unacceptably high cases and daily death counts. Watch the video below:
With one eye on record cases in the Eurozone, Covid-19 could make a massive comeback in the U.S., with Fauci already warning of a rough winter.
Now that the Federal Reserve has once again made itself integral to the stock market’s performance, investors will be keeping an eye on new policy developments. :
Economists at ING have outlined next week’s Federal Reserve meeting as the most critical U.S. risk event on the horizon. Although no surprises are expected, the FOMC’s commitment to keeping the short-end of the curve flat is expected to be the focus. According to ING:
This is unlikely to be massively market-moving given the Fed’s “dot plot” of individual member forecasts suggests just two members expect rates to be raised before the beginning of 2023 – it will merely reinforce the message that the Fed really, really won’t be raising rates imminently, thereby anchoring the short end of the curve even more sturdily.
Although he almost certainly won’t mention it, Fed Chair Jerome Powell knows that the stock market has suffered this month. With tech stocks already unwinding some of their massive gains, the Fed is well aware that the market needs words of encouragement.
The Dow 30 were mostly higher on Friday, but tech shares struggled. Apple’s stock declined amid reports from JPMorgan that its iPhone sales are not firing on all cylinders. Salesforce.com and Microsoft also declined.
Watch the video below for more insight on market pressures.
On the opposite side of the ledger, Nike, Dow Inc., Caterpillar, and Coca-Cola each rose more than 1.8%.
Last modified: September 23, 2020 2:29 PM