Stock came back from a weak start to the day to finish slightly positive on Wednesday.
The major indexes started the day down after more troubling news from the UK and international markets, but came all the way back after strong US data and relatively dovish statements from the Federal Reserve.
But first, the scoreboard:
- Dow: 17,920.26, 79.64, (0.45%)
- S&P 500: 2,099.98, 11.43, (0.55%)
- Nasdaq: 4,859.75, 36.85, (0.76%)
- WTI crude oil: $47.63, (1.63%)
- 10-year Treasury yield: 1.3850%, (1.32%)
- FTSE 250: 15,669.71, -64.97, (-0.41%)
- The Fed expressed concerns over the labour market. In the FOMC’s minutes for the June meeting, the US central bank said some members were concerned over the state of America’s labour market after the May jobs report. “Almost all participants judged that the surprisingly weak May employment report increased their uncertainty about the outlook for the labour market,” said the minutes. However, they also reiterated that the members did not change their opinion on the long-term health of the economy based on one economic data release. The meeting, and thus the minutes, occurred before the UK’s Brexit vote.
- The Brexit fall-out is hitting some of the UK’s biggest real estate investors. Henderson Global Investors and Columbia Threadneedle suspended withdrawls from their UK property funds, following the shutdowns of 3 other real estate investing funds in the country. The firms said they were facing a wave of redemption requests following the UK’s vote to leave the European Union and did not have enough liquidity to meet the requests. London’s FTSE 250 stock index, which is more UK-focused than the more widely-quoted FTSE 100, closed the day down 64.97 points, a 0.41% drop, at 15,669.71.
- Valeant got a huge vote of confidence from Walgreens. The troubled pharmaceutical maker, which has been hit by scandal and a 90% stock price drop, received a huge boost from it’s retail partner Wednesday. During a quarterly earnings call, Walgreens Co-COO Alexander Gourley said the retailer was “satisfied” with the relationship. After the news, Valeant shares rallied by more than 13%. Also, Walgreens posted mixed earnings for its fiscal third quarter.
- There may be another fatal crash involving Tesla’s autopilot. The National Highway Safety Administration said it was looking into a fatal crash on July 1 to determine whether the driver’s Tesla Model X had the autopilot feature engaged at the time of the accident. This is the second such recent fatal incident involving a Tesla, a similar occurrence happened with a Model S on May 7.
- The US service sector stayed strong. Both the Institute of Supply Management and Markit Economics released strong reports on the US services economy on Wednesday. While not overwhelming, the numbers did indicate that the sector which employs a large majority of the US population remained in expansionary territory.
- The trade deficit expanded for the US in May. The deficit between imports and exports rose in May according to the Commerce Department. The deficit widened 10% to -$41.1 billion, wider than expectations of -$40 billion.
- Bill Gross thinks that the entire world economy is playing a losing game of Monopoly. In his latest outlook on Wednesday, investing guru Bill Gross of Janus Capital used a (somewhat convoluted) analogy comparing the world economy to a game of Monopoly. He said that as credit growth is slowing, the economy could end up like the end of a Monopoly game with a “dog eat dog with the survival of many of the players on the board at risk.” Based on our games of Monopoly, that’s an accurate description of it’s typical conclusion, but we’re not sure about the economy.