Stocks traded little changed Wednesday as investors considered the latest batch of stronger-than-expected economic data and digested meeting minutes from the Federal Reserve.
Each of the three major indexes hugged the flat line, with the S&P 500 and Dow hovering near record levels.
Investors this week have been digesting a spate of better-than-expected economic data, with job growth accelerating faster-than-anticipated, an index of service sector activity reaching a record level and manufacturing activity expanding by the most in decades in recent months. The International Monetary Fund upgraded its global growth forecast to 6% this year from the 5.5% rise seen previously, largely reflecting the quick recovery in the U.S. economy. And JPMorgan Chase CEO Jamie Dimon said Wednesday that the current U.S. economic boom "could easily run into 2023" amid the massive fiscal and monetary policy support provided to individuals and businesses.
"Clearly the market today is telling you, don't try to bend the trend. There's an upward bias to the market – it's a fairly strong upward bias and until it breaks, you want to, I think, be heavily in equities," George Ball, Sanders Morris Harris CEO, told Yahoo Finance on Wednesday. "But when prices do break, the market clearly is seeking some form of new leadership, [so] I don't think smart investors would be wise to buy a dip quickly."
But even given these upbeat signals, inflation concerns that had weighed on investors in recent weeks at least temporarily attenuated, and the yield on the 10-year Treasury note fell back toward 1.65%, or about 10 basis points below last week's highs.
The Federal Open Market Committee's March meeting Wednesday afternoon also offered a look at how monetary policymakers were thinking about the conditions sufficient to warrant an adjustment to their policy stance, and what level and duration of inflation might prompt a move. In these, "participants noted that the economy was far from achieving the [FOMC's] broad-based and inclusive goal of maximum employment," suggesting a sharper and more sustained rebound would be needed before policymakers begin to think about tightening.
Investors have also been eagerly awaiting first-quarter earnings season in the coming weeks, with the reports likely to show corporate profits grew in tandem with strengthening economic conditions.
In the near-term, additional incoming signs of economic expansion are likely to continue buoying equities. However, as growth starts to taper after an initial surge off last year's virus-depressed levels, the march higher in stocks could also take a pause, some strategists warned.
"Very near term, we expect equities to continue to be well supported by the acceleration in macro growth, and see buying by systematic strategies and buybacks driving a grind higher," Deutsche Bank strategist Binky Chadha wrote in a note. "But we expect a significant consolidation (-6% to -10%) as growth peaks over the next three months."
"We then see equities rallying back as our baseline remains for strong growth but only a gradual and modest rise in inflation," Chadha added. "Further out, late summer and into the fall we see the risks to inflation as being to the upside."
1:03 p.m. ET: Stocks end mixed, with the S&P 500 and Dow hovering near record highs after Fed signals easy policy to continue during recovery
Here were the main moves in markets as of 1:03 p.m. ET:
S&P 500 (^GSPC): +5.91 (+0.15%) to 4,079.85
Dow (^DJI): +16.02 (+0.05%) to 33,446.26
Nasdaq (^IXIC): -9.54 (-0.07%) to 13,688.84
Crude (CL=F): +$0.24 (+0.40%) to $59.57 a barrel
Gold (GC=F): -$5.70 (-0.33%) to $1,737.30 per ounce
10-year Treasury (^TNX): -0.3 bps to yield 1.6530%
3:10 p.m. ET: Nikola shares dip after company loses fuel-cell development head
Nikola (NKLA) shares sank 5% Wednesday afternoon after the company said its head of fuel-cell development departed from the company.
Jesse Schneider, executive vice president of technology, hydrogen and fuel cells, left Nikola at the start of April, Bloomberg first reported.
The departure comes at an especially inauspicious time for Nikola, considering that General Motors late last year pared back plans to work on an electric pick-up truck with Nikola, leaving the company to rely more heavily on in-house development. Its hydrogen powered truck is scheduled to go into production at a factory still under construction in Arizona in 2023.
2:09 p.m. ET: FOMC meeting minutes show participants viewed economy as 'far from' reaching Fed goals
The Federal Open Market Committee's March meeting minutes showed most FOMC members still felt the economy had a long way to go before reaching the central bank's targets on labor participation and inflation, suggesting adjustments to the current, highly accommodative monetary policy stance were unlikely in the near-term.
"Participants noted that the economy was far from achieving the Committee’s broad-based and inclusive goal of maximum employment," according to the minutes. "Some participants commented that labor force participation continued to be held down by workers’ health concerns and additional childcare responsibilities associated with virtual schooling and that the pace of recovery in the labor market would depend importantly on how rapidly those affected by these issues could rejoin the labor force."
On inflation, "most participants noted that they viewed the risks to the outlook for inflation as broadly balanced," the minutes said.
10:22 a.m. ET: Carnival reports nearly $2 billion adjusted net loss for Q1, says it has 'enough liquidity' to return to 'full operations'
Carnival Corporation (CCL) posted losses of nearly $2 billion in the first three months of the fiscal year, with suspended sailings still weighing heavily on the cruise industry.
The company's adjusted net loss of $1.95 billion was wider than the $1.74 billion consensus analysts were expecting, according to data from Bloomberg. The company also swung to a loss compared to net income of $150 million in the same period last year.
Carnival also reassured investors that it had adequate liquidity to support its recovery as social distancing standards ease in the coming months.
"At this time, we believe we have enough liquidity to get us back to full operations and we will be pursuing refinancing opportunities to reduce interest expense and extend maturities," Carnival said. "We have successfully identified and implemented actions to optimize our monthly cash burn rate and we will continue to do so."
9:30 a.m. ET: Stocks open slightly lower
Here's where markets were trading as of 9:30 a.m. ET:
S&P 500 (^GSPC): -0.08 points, or roughly flat, to 4,073.86
Dow (^DJI): -27.93 points (-0.08%) to 33,402.31
Nasdaq (^IXIC): -22.29 points (-0.16%) to 13,677.87
Crude (CL=F): -$0.16 (-0.27%) to $59.17 a barrel
Gold (GC=F): -$6.50 (-0.37%) to $1,736.50 per ounce
10-year Treasury (^TNX): +0.9 bps to yield 1.665%
8:30 a.m. ET: U.S. trade deficit widened in February, reaching $71.1 billion
The U.S. goods and services trade gap increased further in February as a month-over-month drop in exports outpaced a more modest decline in imports, the Commerce Department announced Wednesday.
The February trade deficit widened by $3.3 billion from January's revised level to reach $71.1 billion. For the year-to-date, the goods and services deficit increased by $56.5 billion, or nearly 70%, over the same period last year.
Exports in February fell by $5 billion from January to $187.3 billion, while imports declined by $1.7 billion to $258.3 billion.
By country, the U.S. trade deficit with China increased by $3.1 billion to $30.3 billion in February, with exports falling by $4.5 billion and imports dropping by $1.5 billion. The deficit with Canada also increased, while the deficit with Mexico narrowed during the month.
7:32 a.m. ET: Mortgage applications slumped last week as rates reach highest level since June
An index tracking U.S. mortgage applications slid for a fifth straight week last week as mortgage rates climbed higher.
Mortgage applications fell by 5.1% week-on-week, the Mortgage Bankers Association said Wednesday. Beneath the headline decline, refinances fell 5% over last week and plunged 20% over the same week last year. On an unadjusted basis, purchases fell 4% week-on-week, but still held 51% higher than a year earlier.
“Mortgage rates resumed their upward move last week, with the 30-year fixed rate at 3.36%. The return of rates to the highest level since last June contributed to a slowdown in applications for both purchases and refinances," said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "The rapidly recovering economy and improving job market is generating sizable home buying demand, but activity in recent weeks is constrained by quicker home-price growth and extremely low inventory."
7:18 a.m. ET: Stock futures trade flat to slightly higher
Here were the main moves in markets Wednesday morning:
S&P 500 futures (ES=F): 4,065.25, up 1.25 points or 0.03%
Dow futures (YM=F): 33,322.00, up 7 points or 0.02%
Nasdaq futures (NQ=F): 13,575.00, up 5 points or 0.04%
Crude (CL=F): +$0.45 (+0.76%) to $59.78 a barrel
Gold (GC=F): -$7.10 (-0.41%) to $1,735.90 per ounce
10-year Treasury (^TNX): +0.4 bps to yield 1.66%
7:15 a.m. ET: JPMorgan CEO Dimon says U.S. economic boom 'could easily run into 2023'
The CEO of the largest U.S. bank by assets said in a letter to shareholder Wednesday that the outsized U.S. economic expansion could span at least another two years, with unprecedented fiscal and monetary policy support serving as a key driver.
"I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE [quantitative easing], a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom," JPMorgan Chase CEO Jamie Dimon said in his annual letter. "This boom could easily run into 2023 because all the spending could extend well into 2023."
"The permanent effect of this boom will be fully known only when we see the quality, effectiveness and sustainability of the infrastructure and other government investments," he added. "I hope there is extraordinary discipline on how all of this money is spent. Spent wisely, it will create more economic opportunity for everyone."
6:02 p.m. ET Tuesday: Stock futures edge up
Here's where markets were trading Tuesday evening:
S&P 500 futures (ES=F): 4,066.25, up 2.25 points or 0.06%
Dow futures (YM=F): 33,330.00, up 15 points or 0.05%
Nasdaq futures (NQ=F): 13,581.75, up 11.75 points or 0.09%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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