Global stocks rise despite Fed's Powell warning that the coronavirus downturn could last until late 2021
Global stocks climbed on Monday as investors brushed off Federal Reserve chairman Jerome Powell's warning that the coronavirus-fueled economic downturn could last until the end of next year. US oil prices jumped more than 5% to a 2-month high, passing $30 a barrel for the first time since prices turned negative in late April. Gold rose about 1% to its highest level in more than seven years. Visit Business Insider's homepage for more stories.
Global stocks climbed on Monday as investors brushed off Federal Reserve Chair Jerome Powell's warning that the coronavirus downturn may linger until late 2021. In a "60 Minutes" interview on Sunday, Powell said that Americans should prepare for a prolonged US recovery as it would "take a while for us to get back." However, he remained optimistic about an economic rebound if there isn't a second wave of infections. Powell acknowledged that the unemployment rate could soar as high as 25%, but expressed confidence that government policies will be able to keep families solvent. "There's a lot more we can do...we're not out of ammunition by a long shot," he said. The comments reassured investors that the central bank can handle further economic fallout, analysts said. "This went some way to reversing the losses Powell provoked last week, when the Fed chair appeared to take negative interest rates off the table," Connor Campbell, a financial analyst at SpreadEx, said in a morning note. Read More: A Wall Street equity chief lays out 5 reasons why another 'significant drawdown' in stocks is coming right after the fastest crash in history Market sentiment likely benefited from easing of lockdowns in several countries and signs of a slowdown in the number of new coronavirus cases. It may also have been buoyed by the House of Representatives passing a second $3 trillion relief bill last week. However, the legislation may not be approved by the Republican-controlled Senate. Meanwhile, the prospect of further government support boosted stocks across the pond on Monday. "Giddy at the thought of some more monetary juice being pumped into the markets, European investors woke up with a spring in their step," Campbell said. Japan's Nikkei index also rose 0.5%, despite the release of official data on Monday showing the world's third-largest economy tumbled into its first recession since 2015. The nation's gross domestic product fell by 0.9% in the first three months of the year, after dropping 1.9% in the fourth quarter of 2019 — before lockdowns and restrictions were even implemented. Exports also fell the most since the crippling March 2011 earthquake. Read More: 'We have a depression on our hands': The CIO of a bearish $150 million fund says the market will grind to new lows after the current bounce is over — and warns 'a lot more pain' is still to come Here's the market roundup as of 11:25 a.m. in London (6:25 a.m. ET):
European equities rose, with Germany's DAX up 2.7%, Britain's FTSE 100 up 2.1%, and the Euro Stoxx 50 up 2.1%. Asian indexes climbed with China's Shanghai Composite up 0.2%, Hong Kong's Hang Seng up 0.6%, and Japan's Nikkei up 0.5%. US stocks are set to open higher. Futures underlying the Dow Jones Industrial Average, the S&P 500, and the Nasdaq rose between 1.2% and 1.5%. Oil prices jumped, with West Texas Intermediate up 7% at $31.60, and Brent crude up 5.6% at $34.30. The benchmark 10-year Treasury yield rose to 0.64%. Gold rose 0.9% to $1,772, its highest level in more than seven years.
Read More: GOLDMAN SACHS: Buy these 14 stocks poised to surge in an economic recovery because of their limited exposure to consumersSEE ALSO: Fed Chairman Jerome Powell says economic downturn could last until late 2021 Join the conversation about this story » NOW WATCH: Pathologists debunk 13 coronavirus myths
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Summary List Placement US equities climbed Tuesday as a tech-led rebound offset a resurgence of COVID-19...Summary List Placement US equities climbed Tuesday as a tech-led rebound offset a resurgence of COVID-19 fears. Mega-caps including Apple, Facebook, and Amazon pushed indexes higher as investors turned back to the recently sold-off growth favorites. Still, new measures to curb the coronavirus's spread in the UK revived fears of fresh lockdowns and another wave of infections. Oil gained, with West Texas Intermediate crude rising as much as 1.6%, to $39.94 per barrel. Watch major indexes update live here. US stocks climbed on Tuesday as a tech-led rebound offset a resurgence of COVID-19 fears. Mega-caps including Apple, Microsoft, and Amazon led the way higher. The firms have seen renewed buying in recent sessions as more investors seek to get in at lower levels. Those gains helped erase premarket declines that came after UK Prime Minister Boris Johnson revealed new measures to curb the coronavirus's spread after fresh outbreaks around the nation. Policies including earlier bar and restaurant closures and encouraging working from home are set to stay in place for at least six months. Here's where US indexes stood shortly after the 9:30 a.m. ET market open on Tuesday: S&P 500: 3,294.16, up 0.4% Dow Jones industrial average: 27,213.90, up 0.2% (64 points) Nasdaq composite: 10,797.01, up 0.1% Read more: US Investing Championship hopeful Tomas Claro hauled in a 409.1% return through August. Here's the unique trading strategy he's leveraging — and 3 stocks he's holding right now. The gains come after fresh pandemic concerns and allegations of money laundering at major banks dragged the Dow into a 510-point loss on Monday. Healthcare shares also tumbled in the prior session as the death of Justice Ruth Bader Ginsburg sparked fears the Affordable Care Act being reversed in the Supreme Court. The frothy start to the week kept volatility at relative highs. Wild price swings have stuck around through September after investors first dumped tech stocks at the start of the month. Cboe's VIX index — the preferred gauge of market volatility on Wall Street — jumped as high as 31.18 on Monday. Tesla sank on Tuesday after CEO Elon Musk tweeted that innovations revealed at its "Battery Day" event may not reach "serious high-volume production" until 2022. The Tuesday event has long been viewed by shareholders as the next driver for strong gains. Read more: A fund manager who's returned 49% to investors this year with incredible market timing explains why the weakness in stocks is going to get worse Investors will also look to House testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin for updates to the US economic recovery. Powell's prepared remarks note that the bounce-back still faces significant uncertainties after "marked improvement" in recent months. Gold rose as much as 0.4% to $1,920.05, swinging back above $1,900 after sinking below the threshold in Monday's sell-off. Treasury yields and the US dollar wavered. Oil prices gained but failed to fully retrace Monday's slump. West Texas Intermediate crude rose as much as 1.6%, to $39.94 per barrel. Brent crude, oil's international standard, gained 1.8%, to $42.20 per barrel, at intraday highs. Now read more markets coverage from Markets Insider and Business Insider: Tony Greer made 5 times his money with an early investment in Apple. The macro investor and ex-Goldman Sachs trader provides an inside look into his trading tactics and shares his top 3 ideas right now. US government debt will reach nearly twice economy's size in 2050, Congressional Budget Office says Fed's Kaplan says 'excess risk-taking' in market can harm financial system during recoveryJoin the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship
US stocks rose Wednesday following a key Federal Reserve policy meeting and congressional testimony from big...US stocks rose Wednesday following a key Federal Reserve policy meeting and congressional testimony from big tech companies including Facebook and Amazon. The Federal Reserve held interest rates near zero, and again pledged to do whatever it takes to aid the US economy in recovery from the pandemic recession. Starbucks and AMD shares climbed after earnings releases. Boeing and General Motors shares also ticked up after earnings reports. Later this week, Apple, Amazon, and Alphabet are set to report quarterly earnings. Read more on Business Insider. US stocks rose Wednesday after the Federal Reserve signaled it will provide continued stimulus to the economy amid the pandemic recession. The Federal Reserve held interest rates near zero on Wednesday, and reiterated that it would do whatever it takes to support the US economic recovery. In a speech, Fed Chair Jerome Powell said the recent uptick in coronavirus cases is beginning to weigh on the recovery. "If anything, there was more mention of fiscal policy than monetary policy in Powell's speech," said Seema Shah, chief strategist at Principal Global Investors. "Certainly, while investors ears were leaning into Powell's comments, their minds will likely also be trained on discussions currently underway in Congress about the forthcoming fiscal cliff." Also on Wednesday, the CEOs of big tech companies including Apple, Amazon, Facebook, and Google parent Alphabet gave testimony before the House Antitrust Subcommittee addressing how they are handling antitrust challenges from regulators. Tech stocks, which have outperformed this year, held onto gains through the start of the hearing. Here's where US indexes stood at the 4:00 p.m. ET market close on Wednesday: S&P 500: 3,258.60, up 1.25% Dow Jones industrial average: 26,541.97, up 0.61% (163 points) Nasdaq composite: 10,542.95 up 1.35% Read more: Jason Tauber is crushing the market this year by finding the tech companies enabling the biggest disruptions. He told us how he's adjusting his game plan as valuations soar - and 7 of his top picks today. Earnings season continued. Shares of AMD surged Wednesday following a better-than-expected earnings release Tuesday. Starbucks rose after its CEO Kevin Johnson said that same-store sales for open locations turned positive in July, a sign of recovery from pandemic-related lockdowns. General Motors and Boeing also ticked up after releasing quarterly results Wednesday before the opening bell. Shares of Tesla gained about 3% after Morgan Stanley boosted its price target for the second time this month. Eastman Kodak surged more than 500% Wednesday after securing a $765 million government loan to produce drug ingredients in response to the coronavirus pandemic. Investors will be awaiting further earnings report scheduled this week. Apple, Amazon, and Alphabet are set to report quarterly earnings on Thursday, giving further information about how the companies have fared amid the pandemic, ensuing lockdowns, and a recent uptick in new COVID-19 cases. Read more: 3 Wall Street pros managing $12 billion in assets share their strategies for profiting from the economy's recovery — and explain why investors should be aggressively taking risks nowJoin the conversation about this story » NOW WATCH: 7 secrets about Washington, DC landmarks you probably didn't know
Stock investors could be 'delusional' if prices continue to rise faster than earnings forecasts, Ed Yardeni says
Stock valuations are soaring ahead of profit expectations, and investors should "come to their senses" and...Stock valuations are soaring ahead of profit expectations, and investors should "come to their senses" and let prices cool, Ed Yardeni, the president of Yardeni Research, said in a Monday note. The S&P 500's forward price-earnings ratio climbed to 22 on Friday, landing about 3 percentage points above the cyclical peak in mid-February. Stock investors might be "delusional" if prices continue to outpace profit forecasts, Yardeni said. Economic risks sourced from stalled stimulus talks, closed schools, and rising COVID-19 cases serve as additional reasons stock buyers should wait for a more sustainable rally, he added. Visit the Business Insider homepage for more stories. Investors should "come to their senses" and give the stock market some time to slow its roll, Ed Yardeni, the president of Yardeni Research, said Monday. Equity prices are outpacing expectations for near-term profits, forming a price-earnings melt-up many have likened to the dot-com bubble of the late 1990s. The rally grew even more vulnerable through the start of earnings season as analysts' earnings estimates fell. The S&P 500's forward price-earnings ratio climbed to 22 on Friday, about 3 percentage points above the cyclical peak seen in mid-February. The index's forward price-sales ratio recently flashed a similar warning sign. The metric reached a record 2.32 in the week that ended on July 16, handily beating its past two cyclical highs. Investors could be in for a world of hurt if the decoupling of prices from profit forecasts carries on, Yardeni said. "Are stock investors delusional? Not yet, but that could be an apt characterization of stock prices continue to rise faster than forward earnings," he wrote in a note to clients. Read more: 'Castles built on sand': Famed economist David Rosenberg says investors are being too reckless as stocks rally — and warns that a vicious long-term bear market is far from over Various economic risks also threaten the run-up, the strategist said. The US economic recovery could be slowed or even derailed by rising COVID-19 cases or a failure to pass additional economic stimulus on time. Separately, a shift to online classes for schools could create "a serious problem for parents' ability to return to work," Yardeni said, adding that another semester of online classes at colleges would slam nearby small businesses. The looming economic dangers and overextended valuation metrics give investors even more reason to grow cautious of stocks' steady uptick. While the Federal Reserve "continues to keep the wild party going" with its various liquidity-boosting policies, it shields investors from "the harsh reality of the health crisis" and its economic fallout, Yardeni said. "There's certainly mounting evidence that the V-shaped economic recovery during May and June is slowing or even stalling in July," the strategist said. "That could lead to more delinquencies and defaults on loans and bonds." Now read more markets coverage from Markets Insider and Business Insider: US consumer confidence snaps 3-month winning streak as new COVID outbreaks stifle reopening optimism US stocks decline as investors weigh GOP stimulus plan and earnings disappointments A fund manager who's quadrupled investors' money since 2011 says he uses a famed 5-part psychological theory to shape his portfolio. Here are the stocks he bought for each stage.Join the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship