The markets today, Friday, appear set for a choppy day with major indices mixed between red and green at time of writing.
Several factors explain the drag including declines in some tech stocks, profit-taking in them, drops in bank stocks, and disappointment with lack of new stimulus initiatives from the U. S. Federal Reserve, notwithstanding its decision to leave interest rates unchanged until 2023.
Investors were reassessing their outlook, explains Chris Beauchamp, Market Analyst at IG, a London-based trading firm, adding that global markets found the results of the Fed meeting a disappointment.
“Investors had evidently hoped for something much more concrete than the relatively vague policy outlook provided by (Fed Chairman Jerome) Powell and co,” he said. Beauchamp says that ‘the Fed’ and the European Central Bank appear content to ‘err on the side of caution for now with regard to doing any more’.
Beauchamp says that chances of fiscal stimulus appear to be receding currently.
Mixed up in this combination are a nervousness over a stalling recovery although the U. S. Labor Department reported that the number of Americans filing new benefits had dropped, while it still remains at high levels.
A report yesterday that ‘the Fed’ is extending its constraints on bank dividends and share buybacks likely added to the downward pressures.
Beyond this week, market forces are moving targets and it may be that uncertainty over COVID19 and its impact have more influence than nervousness about who will live in the White House next January.
To borrow again a line from Blade Runner 2049: Buckle up.