The Nasdaq closed at a record high on Tuesday, lifted by Big Tech. Amazon and Microsoft led the way as investors put their money in growth stocks.
Other sectors had a good day too, though, after two Federal Reserve members made comments that assured investors that interest rates will remain low—at least for now.
Fed Chairman Jerome Powell said in a Tuesday morning statement that inflation will drop back toward its longer-run goals after transitory supply effects abate. His comments followed Monday remarks from New York Fed President John Williams, who said that with employment still far from the Fed’s goal, the central bank will keep interest rates low for the moment.
These comments come after stocks slid last week when the Fed indicated that it is more likely to raise interest rates in 2022 than previously anticipated.
“NY Fed President Williams and the text of Powell’s speech struck reassuring tones,” writes Dennis DeBusschere, head of portfolio strategy research at Evercore.
Going forward, markets are likely to be wary of Fed actions to come. The central bank is still planning on lifting interest rates either in 2022 or 2023 and it is likely to first reduce the size of its bond purchasing program first, a move that would lower bond prices and lift their yields. While this week’s trading has sent stocks up, the S&P 500 is still just shy of its all-time closing high hit June 14 and it’s up only 0.3% since the beginning of May, when it hit a previous high.
“While the Federal Reserve hasn’t changed their accommodative stance on stimulus, uncertainty over how the Fed may react to sustained inflation should keep stock market volatility elevated over the short-term,” writes Tom Mantione, managing director at UBS Private Wealth Management.
The price of WTI crude oil slipped after exhibiting big gains of late. It was down 0.8% to just over $73 a barrel. That comes after a more than 10% rise in the past month, which sent it to a one year high Monday. The price is now a touch below that high.
The Nikkei 225 closed 3.1% higher on Tuesday, following Monday’s 3.3% nosedive. The volatile swings left the index just 0.3% lower than Friday’s levels. The Bank of Japan’s decision to buy 701 billion yen ($6.35 billion) of exchange-traded funds—its first purchase in two months—helped restore confidence.
Other Asian markets followed Wall Street’s lead in recovering some of the losses seen since the Federal Reserve’s monetary policy decision of last week, with the Kospi Composite rising 0.7% and the S&P ASX 100 up 1.5% in Sydney. Major European benchmarks were mixed.
These stocks were moving on Tuesday:
GameStop (ticker: GME) stock gained 9.6% after the company said it raised $1.1 billion in stock. Shares fell 6.3% on Monday.
CrowdStrike (CRWD) stock gained 7.96% after Stifel upgraded shares to Buy from Hold.
Splunk (SPLK) stock gained 11.25% after the company said private equity group Silver Lake will make a $1 billion investment in convertible bonds to help finance the company’s goals.
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