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Four best months. After spending most of the day in the red, the S & P 500 and the Dow Jones Industrial Average managed to return to positive territory on Tuesday. At the close of Tuesday, the S & P 500 has gained 17.51% since the beginning of the year, the best first four months of the year since 1987, when it had gained 19.07%. The Dow is up 14% this year, its best start to the year since 1999, when it gained 17.51%.
General Electric
stock (ticker: GE) rose 4.5% on Tuesday based on solid first quarter results and other optimistic data.
The Nasdaq Composite, by contrast, lost 0.7% Tuesday, the parent company of Google
Alphabet
(GOOGL) had its worst trading day since 2012 after disappointing first-quarter sales.
Trade talks between the United States and China and a statement by the Federal Reserve on monetary policy expected Wednesday are also at the center of the debate. Today After the bell, we …
- wonder if the Federal Reserve will cut rates this year;
- summarize current economic data;
- and check the rise in oil prices in the Venezuelan turmoil.
Will we see a rate reduction?
The three major US indices ended Tuesday near the breakeven point. the
Dow Jones Industrial Average
rose 38.52 points, or 0.15%, to close at 26,592.91. the
S & P 500
added 2.80 points, or 0.10%, to finish at 2945.83, and the
Nasdaq Composite
slipped 66.47 points, or 0.81%, to finish at 8095.39.
The Federal Reserve will close its May monetary policy meeting and publish the latest statement on monetary policy. The futures market for federal funds largely predicts unchanged rates for this meeting.
However, some traders do not think this will last long, given the low inflation of recent months, despite the Fed's pause in the rate hike since January. Monday's data showed that basic personal consumption spending, the Fed's favorite inflation gauge, rose 1.6% in March, its slowest pace in 18 months.
"Futures traders on federal funds are relying more and more on a rate cut, even though the data shows that an economic rebound could be on the way," wrote John Lynch of Search LPL Tuesday. Futures on federal funds now provide a probability of reducing a rate of 40% and two rate cuts of 20% by the end of 2019, according to Lynch.
President Donald Trump has also made his contribution, proposing that the Fed cut rates by one percentage point and introduce quantitative easing to stimulate the economy, along with China. "Our Federal Reserve has raised interest rates all the time, even if inflation is very low, and has introduced a very high dose of quantitative tightening," Trump told Twitter, saying the economy "would go up like rocket "with a reduction in interest rates.
Reducing rates by one percentage point is quite extreme, even for the most bearish strategists. With economic growth of more than 3% in the last quarter, healthy wage growth and a strong job market, Lynch does not expect any Fed rate cuts in the near future.
The Fed has reduced its benchmark rate only 45 times since 1950, he noted, but only 12 rate cuts occurred after a quarter when output growth was over 3%. "In many of these cases, leading indicators had signaled imminent weakness," says Lynch.
Tuesday's economic data was mixed. The official Chinese manufacturing PMI fell by 0.4 points to 50.1 in March, the United States in Chicago by 6.1 points to 52.6, while the preliminary growth of the gross domestic product of the euro area Was 0.4% for the first quarter, exceeding the consensus by 0.3% and the previous quarter. 0.2% gain. April's consumer confidence rose from 5.1 to 129.2, and March's upcoming home sales rose 3.8% from the previous month.
At the same time, crude prices rose on Tuesday, while Saudi Arabia said it would not rush to increase oil supply, and that the political crisis in Venezuela was continuing. to deteriorate. Today, opposition leader Juan Guaido has called for a military uprising to overthrow President Nicolas Maduro.
US benchmark West Texas Intermediate crude for the June delivery rose 41 cents, or 0.7%, to $ 63.91 a barrel, while the benchmark global crude for the delivery of June rose 76 cents, or 1.1%, to end at $ 72.80 a barrel.
The hot stock
Seagate Technology
STX climbed to the top of the S & P 500 on Tuesday, with a better-than-expected earnings report for the third quarter.
Seagate shares climbed $ 3.38, or 7.5%, to $ 48.32.
The storage technology company earned 83 cents a share for a $ 2.31 billion business, while analysts were looking for a 71 cents EPS on $ 2.32 billion in revenue. For the fourth quarter, EPS is expected to remain about steady, compared to the consensus estimate of 81 cents, and investors were also encouraged by management's comments about a likely recovery in demand for year course.
In the last 12 months, the Seagate stock has decreased by 18.8%.
The biggest loser
Google's parent, Alphabet, sank at the bottom of the index, following the "shocking" slowdown in sales.
Alphabet Class (GOOG) shares lost $ 99.10, or 7.7%, to $ 1,188.48, while Class A shares (GOOGL) were the third worst performing shares of the day , falling $ 97.24, or 7.5%, to $ 1,198.96.
The shortfall was rare and disturbing for Alphabet, to the point that equities had their worst day in years.
In the last 12 months, the alphabet stock has increased by 16.8%.
–Teresa Rivas
Write to Evie Liu at [email protected]
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