(Bloomberg) – Shares erased gains amid a massive sell-off of giant tech companies and remarks from Federal Reserve Chairman Jerome Powell on an uncertain economic rebound without further stimulus.
The S&P 500 initially surged as the Fed said it would keep rates close to zero until at least 2023. The rally quickly came to an end after Powell said he was not sure the faster-than-expected recovery would continue. A fall at tech giants like Apple and Facebook also lowered the gauge. The Treasury yield curve steepened as the US central bank halted before offering further clarification on its approach to the monthly bond purchases that supported markets. Some traders may have been expecting signals about plans to target longer maturities.
Read: Fed signal rates will stay close to zero for at least three years
Fed officials have stressed in recent weeks that the US recovery depends heavily on the country’s ability to better control the coronavirus, and that further fiscal stimulus is likely needed to support jobs and incomes. “The recovery has progressed faster than expected,” said Powell, while warning that “the way forward remains very uncertain.”
“The fact that he highlighted the potential negative economic consequences of a lack of congressional action on fiscal stimulus has certainly served to upset investors,” said Alec Young, chief investment officer at Tactical Alpha LLC, referring to Powell.
The White House strongly indicated on Wednesday that it was prepared to increase its bid in talks with the Democrats, and that Senate Republicans are expected to move forward to seal a stimulus deal in the next week to 10 days.
Here are some key upcoming events:
- The policy decisions of the Bank of Japan, the Bank of Indonesia and the Bank of England come on Thursday.
- Quadruple witchcraft on Friday – the quarterly expiration of futures and options on indices and stocks – in US markets
Here are some of the main movements in the markets:
- The S&P 500 fell 0.5% at 4 p.m. New York time.
- The Stoxx Europe 600 index climbed 0.6%.
- The MSCI Asia Pacific index rose 0.6%.
- The Bloomberg Dollar Spot Index fell 0.1%.
- The euro was little changed at $ 1.1817.
- The Japanese yen was little changed at 104.96 per dollar.
- The yield on 10-year Treasuries gained two basis points to 0.70%.
- Germany’s 10-year yield fell one basis point to -0.48%.
- The UK 10-year yield fell by one basis point to 0.211%.
- The Bloomberg Commodity Index gained 0.7%.
- West Texas Intermediate crude rose 5% to $ 40.18 a barrel.
- Gold was little changed at $ 1,959.20 an ounce.
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