US stocks fell to an 8-week low on Wednesday as Fed officials remain confident that an additional stimulus package is necessary to lift the economy out of recession.
- Dow Jones -1.92% to 26763.1 points (YTD -6.2%),
- S&P 500 -2.4% to 3236.9 p. (YTD +0.2%),
- NASDAQ -3% to 10633 p. (YTD +18.5%).
Apple shares were the biggest contributor to the S&P 500's decline, falling 4.2%. Albemarle shares showed the greatest negative dynamics among the index components (-15.6%). Of the 505 stocks in the index, 478 fell and 27 rose. All 11 sectors showed declines. The IT sector made the largest contribution to the decline in the index (-3.2%). The index traded at a ratio of 25.2 to earnings for the past year and at a ratio of 24.7 to the projected earnings of its constituent companies for the coming year.
From the absolute maximum formed on September 2, the S&P 500 index fell by 9.9%. The current value of the 100-day moving average is 3197.4 points. If it is tested, it will mean that the index has fallen 10.9% from its record peak. Accordingly, a fall of 13.4% will test the 200-day moving average with the current value at 3105.8 points. A close below the 200-day MA will be a clear threat to the bull market.
Some more minor statistics: the three major US stock indexes fell by at least one and a half percent during the trading session for the third time in September.
New Supreme Court Judge
Senate Republicans plan to begin confirmation hearings for a Supreme Court justice on Oct. 12. Donald Trump will nominate the candidate to replace the late Ruth Ginsburg, who died the day before from cancer at the age of 87. With this plan, Republicans expect to reach a final vote in the Senate on the nomination by October 26, that is, they can make it before the presidential election on November 3. However, Democrats would like to see the next Supreme Court justice determined by the winner of the November presidential election. Accordingly, they expect to use procedural maneuvers to delay the process. Trump will announce his nominee on Saturday.
Fed agitates for new stimulus
A slate of Fed officials spoke Wednesday in favor of more fiscal stimulus, which is critical to supporting the economic recovery. Stocks fell in response as investors doubt Congress will ever break the impasse and agree on a new support package. Fed Chairman Jerome Powell, speaking in Congress, carefully hinted that lawmakers need to agree on additional support. Cleveland Fed President Loretta Mester was much more blunt, noting that stimulus is urgently needed given the depth of the hole the economy has to dig itself out of. Boston Fed President Eric Rosengren chillingly suggested that it would take a new wave of the pandemic to force lawmakers to agree on a new package of measures. But even in this situation, an aid package should not be expected until next year.
As part of the July rally, the market was confident that the package in question would be adopted in August. In fact, as of the end of September, negotiations are at an impasse and there are no real discussions currently taking place. Ruth Ginsburg's death has shifted lawmakers' focus to the nomination of a new justice, pushing debate over additional stimulus into the background.
WHATTONEWS
The date May 19, 2021 will go down in the history of the crypto market as “Black Wednesday.” Bitcoin lost $13,000 in a day (over 30%), coming close to the psychologically important $30,000.
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