Markets made a u-turn in trading, with stocks, the dollar and crude oil all reversing the initial reaction to Wednesday’s Federal Reserve statement.
First, the scoreboard:
- Dow: 17,972.84 -103.35 (-0.57%)
- S&P 500: 2,091.37 -8.13 (-0.39%)
- Nasdaq: 4,998.04 +15.21 (0.31%)
And now, the top stories on Thursday:
- Biotech stocks supported a rally in the Nasdaq that kept the index alone in the green through the trading day. After the Federal Reserve assured markets it would be cautious in raising interest rates yesterday, despite removing language indicating it will be “patient,” stocks rallied. “Stocks are giving back a portion of late yesterday’s huge gain as traders continue to speculate on future Fed policy maneuvers in the backdrop of today’s mixed economic data releases,” the NYSE’s Rich Barry wrote in an afternoon email.
- The dollar resumed its rally, following a sudden 2.5% plunge in after-hours trading yesterday. The currency’s index, which measures it against its major peers, climbed back above the key level at 99.00 to as high as 99.77. The euro and yen reversed yesterday’s gain, falling against the dollar.
- But according to HSBC, the dollar’s rally is overdone: “Excluding the mega rallies, the latest [US dollar] rally has been bigger than average,” the firm noted. It argued that the cycle is surprisingly EUR-USD bullish, valuations show the dollar is ‘rich,’ and it weakens in the early months of a Fed-hike cycle.
- Crude oil continued sliding after a post-Fed rally. West Texas Intermediate crude fell by as much as 3.5% to as low as $US43 per barrel. Investors have been concerned about oversupply of US oil, with the Energy Information Administration reporting Wednesday that inventories are still at the highest level in at least 80 years.
- Yelp shares fell by as much as 4% after investors got wind of a Kickstarter campaign for a documentary that seeks to expose alleged abuses. The filmmakers allege the company extorts business owners and makes up reviews on its site. A Yelp spokesperson told Business Insider: “The director has a conflict of interest, as she has a history of trying to mislead consumers on Yelp. There is no merit to the claims they appear to highlight.”
- In economic data, initial jobless claims beat expectations last week, climbing to 291,000 from 290,000 the previous week, above the forecast of 293,000. But the Philadelphia Fed’s report on manufacturing activity in March missed expectations, down 5.0 from 5.2 in February, with a forecast of 7.0.
- Apple traded on the Dow for the first time, replacing AT&T. Near the close, the world’s most valuable company’s stock was lower but little changed at around $US127.83 per share. Business Insider’s Sam Ro calculated that a 9% decline in Apple shares will shave off about 77 points from the Dow. The Dow is a price-weighted index, so stocks with the highest price cause the most movements.
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