Wall Street looking for direction after closing records that were tested yesterday by the Nasdaq Composite and the S&P 500.
At about 3:50 pm Italian time, the Dow Jones lost 0.11% to about 35,327 points, the S&P 500 is flat with a change of + 0.04% at 4,487 points, while the Nasdaq moves up 0.18% to 15,047 points. , 58 points.
The Nasdaq tests new records after closing yesterday’s session above the 15,000 points mark for the first time ever. The list of hi-tech stocks has risen by more than + 16% since the beginning of the year and ended yesterday’s session by collecting the 29th close at record values of 2021.
Christopher Harvey, head of equity strategy at Wells Fargo Securities, remains optimistic about US equities as he sees further gains for Wall Street.
Harvey has revised its year-end target for the S&P 500 index upwards to 4,825, a value that corresponds to a 7.5% increase from the (record) closing value of the list in yesterday’s session.
The US stock exchange confirms the expectation for the Jackson Hole symposium, the annual event among the most anticipated by the international financial community which, for the second consecutive year, will be held virtually, the day after tomorrow, Friday 27 August. Markets await indications on the tapering of QE, the asset purchase program with which the US central bank buys up $ 120 billion worth of bonds every month.
“It is quite difficult for a central banker, who meets his colleagues virtually due to a health risk, to say that the time has come to reduce the accommodative monetary policy, without recognizing that the health risk can affect the economy” said Vince Reinhart, Mellon’s chief economist, according to Marketwatch.
However, for Adam Posen, president of the Peterson Institute for International Economics, tapering will be there: “I think it is likely to be launched between now and the end of the year, regardless of the Delta variant.”
Several analysts’ comments and forecasts on what Powell will announce the day after tomorrow. The impression is that for many experts, the Delta variant and the unknown factor of the Covid-19 pandemic will in any case affect the Fed’s monetary policy choices.
“In the main political message from this year’s Jackson Hole conference – titled ‘Macroeconomic Policy in an Uneven Economy’ – we expect some hint of tapering albeit with a certain dovish nuance,” commented Gero Jung, chief economist at Mirabaud Asset Management. . “In general, we are reminded that the reduction in asset purchases or tapering does not represent a ‘quantitative tightening’ – underlines the economist -. The Fed’s balance sheet will in fact continue to grow throughout this year”.
For his part, Edward Moya, senior market analyst at Oanda, commented that “the Fed may also make an announcement on tapering in September or November, but tapering will likely go slow, with no commitment to rate hikes. of interest “.
In short, the uncertainty about Covid-19 infections could delay the Fed’s tapering plans.
On the other hand, the news coming from the health front cannot be called comforting: according to the data collected, Reuters reports that Covid-19 infections in the United States are rising, on average, by 150,000 new cases a day, and that at the moment the infections are equal to 60% compared to the maximum of daily coronavirus infections reported in January in the USA.
Increase fear of the Delta variant.
A few days ago, in a note reported by CNBC, Nomura economist Aichi Amemiya stressed that, “given the recent deterioration of (macro) data and the pandemic situation, we see the risk that Powell will focus on increasing the uncertainty, due to the recent increase in Covid-19 infections “.
Consequently, “at the very least – continued Amemiya – we believe that recent comments from Fed officials support our view of a tapering announcement in December, despite the FOMC’s preference for November, according to what emerged from the meeting of July”.
Lindsey Bell, Ally Invest’s chief investment strategist, has a similar opinion:
“The Fed is unlikely to force a taper in an economy that is not ready, and the outlook is becoming less certain due to the strengthening of the Delta variant.” According to Bell, a determining factor for the Fed will be the publication of the August employment report on September 3 “