Stocks Rise; The Fed's on Deck
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What is the main topic discussed in this episode?
With your money briefing, I'm Charlie Turner in New York for The Wall Street Journal.
How did U.S. stock indexes perform on Friday and for the week?
Stocks posted gains in Friday's session, even in the wake of data that pointed to a further economic slowdown. The Dow Jones Industrials closed up 138 points Friday at 25,848. The Nasdaq Composite gained 57 points, and the S&P 500 rose 14. For the week, the Dow rose 1.6 percent, the Nasdaq gained 3.8 percent, and the S&P added 2.9 percent. Wall Street Journal Markets reporter Akane Ohtani joins us in our studio. Akane, there were some weak reports Friday on industrial production in both the U.S. and China, I believe.
Why are weak industrial-production reports being viewed as 'good' for markets?
Was this a bad news is good news situation since it contributes to the likelihood that the Federal Reserve won't raise interest rates this year?
At least for now, I think that's how investors are reading it. I mean, even though we've seen a number of somewhat downbeat economic reports, not just in the U.S., but in China, as you mentioned, and also across the Eurozone, stocks around the world have largely continued to rise. And I think that's a testament to the bets that are playing out that this kind of weakness that we're starting to see is going to force the Fed and the ECB and the BOJ to so on and so forth, to really dial back their plans to raise interest rates in the future. And that, of course, is accommodative for stocks. I mean, one of the big problems that investors were grappling with last year was this thought that the economy was actually potentially going to overheat, which would force the Fed to accelerate its rate increases.
But now that that problem is largely off the table, I think investors are, if anything, somewhat relieved.
This past week, technology stocks were the strongest sector. The NASDAQ was up nearly 4% this week. Anything there? Or it must be something there.
Well, I think it's really a continuation of this trend that we've seen emerge over the last month or so, where tech stocks, not just in the U.S., but really around the world, have been leading the market's rebound. And it's sort of an interesting reversion, I guess, back to the mean, because, again, we saw this happening at the beginning of last year, And yet, investors seem to be a little bit more at ease with what's happening nowadays. I think because there's a sense that since a lot of these fast-growing companies were so sold off in the final months of 2018, what's happening now seems a bit more sustainable in many people's eyes compared to what we were seeing last year.
What drove the tech-led rebound in the Nasdaq this week?
Going overseas again, was there some relief that UK lawmakers this past week voted against a no-deal Brexit and in favor of extending the current Brexit deadline of March 29th?
Very much so. We saw the British pound immediately start rallying after the results of that vote came in Thursday, and the pound looked set to close the week higher against the dollar as well. So we really have seen, I guess, another one of the fears that investors were grappling with somewhat taken off the table for now. I mean, the base case in many people's minds was that the UK was going to vote against a no Brexit situation. And that's what we did see. Now, there's a lot of uncertainty still left on the table.
What will investors watch at the Fed policy meeting and why does it matter?
We still don't have an actual deal with the UK and the EU. But just the fact that that vote went according to traders' plans is somewhat of a relief for the markets.
And apparently there's a third vote scheduled sometime next week on Theresa May's plan for Brexit. Investors are still watching for any signs of progress in trade talks between the U.S. and China, aren't they? That's always on the table.
Yeah. And I think that's another big reason, apart from the Fed looking a little bit more accommodative, that we're seeing global stocks rebound as hard as they have. It was another good week for Chinese stocks. And again, I think the signs that the U.S. and China's trade talks are still continuing to progress are helping out a lot over there.
Connie, is the Fed policy meeting this Tuesday and Wednesday the main event to watch?
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:06–0:10
2
How did U.S. stock indexes perform on Friday and for the week?
0:10–0:43
3
Why are weak industrial-production reports being viewed as 'good' for markets?
0:43–2:31
4
What drove the tech-led rebound in the Nasdaq this week?
2:31–3:12
5
What will investors watch at the Fed policy meeting and why does it matter?
3:12–4:08
6
How did the UK parliamentary vote on Brexit affect markets and the pound?
4:08–5:32
7
How are U.S.-China trade talks and global factors supporting stock gains?
5:32–6:12
Speakers
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