Stocks finished mixed Thursday, losing early momentum, on concerns the Federal Reserve could begin tapering stimulus this year even as surging coronavirus infections caused by the delta variant raise worries about the pace of the U.S. recovery.
Data from the U.S. Department of Health and Human Services said COVID-19 patients were dying in U.S. hospitals at levels not seen since February, Bloomberg reported.
Oil prices ended down 2.6% and copper – a reliable benchmark for global growth prospects – tumbled below $9,000 a ton on the London Metals Exchange for the first time since April. Iron ore plunged as much as 10%.
The Dow Jones Industrial Average finished down 66 points, or 0.19%, to 34,894. The S&P 500 ticked up 0.13% and the tech-heavy Nasdaq advanced 0.11%.
Nvidia (NVDA) – Get Report was a bright spot, finishing up 4% Thursday after the largest U.S. semiconductor maker by market value issued an upbeat forecast for the fiscal third quarter even as the market for chip supplies remains tight.
The yield on the benchmark 10-year Treasury fell Thursday to 1.24%.
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Stocks finished sharply lower Wednesday after minutes from the latest Federal Reserve meeting showed that central bank officials said more progress was needed in the employment market before it considered tapering stimulus, but most said “it could be appropriate to start reducing the pace of asset purchases this year.”
“While the Fed minutes reveal more conviction in terms of starting to taper this year, they made the bold point that there’s no connection between tapering and rat! e hikes,” said Mike Loewengart, managing director of investment strategy at E-Trade. “That said, the start of tapering necessarily chips away at the tools at the Fed’s disposal, and in reality, after tapering, must come rate hikes.
“But that can be very far down the road. And keep in mind that there’s a pretty big caveat in the Fed’s potential move to start tapering, and that’s improvement on the jobs front. If you take a step back though, the Fed seeing some real economic progress is a good thing at the end of the day,” he added.
The Fed has been buying about $120 billion a month of Treasury securities and mortgage bonds to help prop up the economy during the pandemic.
The central bank's conference next week at Jackson Hole, Wyo., will be top of mind for investors, with some expecting the Fed to provide a more definitive timeline on tapering. Federal Reserve Chairman Jerome Powell’s keynote speech will be closely scrutinized.
It's the Wrong Conclusion to Assume the Fed Is Actually Ready to Tighten Policy
Macy's (M) – Get Report reported second-quarter adjusted earnings of $1.29 a share, smashing estimates that called for a profit of 23 cents. Same-store sales at the retailer jumped 61.2%. The stock finished at $21.61, up 20%.
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