U.S. Equities Retreat, Bonds Gain After Fed: Markets Wrap
A trader talks on the phone while working on the floor of the New York Stock Exchange. (Photographer: Michael Nagle/Bloomberg)

U.S. Equities Retreat, Bonds Gain After Fed: Markets Wrap

An exchange-traded fund tracking the Nasdaq 100 Index jumped in late trading after Apple Inc. crushed revenue estimates and Facebook Inc. reported gains in sales and users.

Stocks ended the cash session lower after a back-and-forth day. The S&P 500 reached a session high after Jerome Powell said the central bank is not considering cutting back on asset purchases that have helped the economy recover from the pandemic. Treasuries rose after the Fed kept interest rates at zero and policy makers strengthened their view of the economy. Recent increases in inflation looked “transitory,” they said, reassuring investors that the central bank is in no hurry to tap the brakes on growth.

Apple rose 3.3% and Facebook gained 5.4% as of 4:44 p.m. in New York.

“No news is good news as far as the market is concerned because it means the Fed will remain accomodative for the near future,” said Ellen Hazen, portfolio manager and principal at F.L.Putnam Wealth Management. “This is a Goldilocks Fed. It is exactly what the equity markets are looking for.”

The Fed decision came as investors parsed the latest batch of corporate earnings reports. Alphabet Inc. rose to a record after its results showed a surge in ad sales. Microsoft Corp. was among the biggest drags, dropping to a three-week low after the software maker failed to deliver the blockbuster results some analysts were looking for. All of the main U.S. equity gauges closed lower.

Facebook Inc. rallied 5% postmarket, adding to gains from the cash session after earnings and sales topped expectations. Apple Inc. also gained after hours as its revenue exceeded the highest estimate. Ford Motor Co. extended declines after giving a disappointing forecast for the year.

Among other earnings-related news:

  • Boeing Co. dropped after it burned through more cash than expected in the first quarter.
  • Texas Instruments Inc. fell the most in two months after it gave a sales forecast that some analysts saw as weak.

With stock valuations about 25% above their five-year average, investors have been searching for new catalysts to sustain the bull market momentum.

U.S. Equities Retreat, Bonds Gain After Fed: Markets Wrap

A string of encouraging data and rapid vaccination progress have boosted optimism about growth prospects in the developed world, reviving the so-called reflation trade in recent days. A release Thursday may show the U.S. gross domestic product increased an annualized 6.8% in the first quarter.

Crude-oil futures rose after OPEC+ expressed confidence in the demand outlook with plans to boost supply, even India’s raging Covid-19 crisis is causing near-term pressure.

Here are some key events to watch this week:

  • President Joe Biden makes his first address as president to a joint session of Congress Wednesday
  • U.S. GDP Thursday is forecast to show growth strengthened in the first quarter

These are some of the main moves in markets:

Stocks

  • The S&P 500 fell 0.1% as of 4:01 p.m. New York time
  • The Nasdaq 100 fell 0.4%
  • The Dow Jones Industrial Average fell 0.5%
  • The MSCI Emerging Markets Index rose 0.4%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.4%
  • The euro rose 0.2% to $1.2129
  • The British pound rose 0.2% to $1.3947
  • The Japanese yen rose 0.1% to 108.59 per dollar

Bonds

  • The yield on 10-year Treasuries declined one basis point to 1.61%
  • Germany’s 10-year yield advanced two basis points to -0.23%
  • Britain’s 10-year yield advanced two basis points to 0.80%

Commodities

  • West Texas Intermediate crude rose 1.2% to $64 a barrel
  • Gold futures were little changed

©2021 Bloomberg L.P.

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