Stocks mixed ahead of Fed. US stocks opened mixed the day after the Nasdaq hit 10,000 for the first time ever. Asia was mixed, while Europe is widely lower. A decision by the Federal Reserve (Fed) on interest rate policy is the big event today, but concerns over higher COVID-19 cases in some states as the economy opens back up and individual investors driving the recent equity strength are in the spotlight.
Fed in a delicate spot. The Federal Open Market Committee (FOMC) is set to announce its latest policy statement today. After the surprise spike in jobs in May, many are anxious to hear the FOMC’s thoughts on the economic turnaround. It is widely expected to leave rates near zero, but guidance on how long, continued central bank support, and whether they will use their purchasing power to cap yields will be important. Also, they will release new economic projections, the “dot plots,” for the first time in 2020.
10-year yield breaks out. Volatility has finally picked up in the US Treasury market after a quiet May when the yield on the 10-year Treasury note traded in only a 15 basis point (.15%) range. We examine which direction longer-term yields may be headed later today on the LPL Research blog.
Covid-19 news. On Tuesday, new US daily cases rose 0.94%, the fourth straight day of week-over-week improvement. This is after adjusting for a one-time spike in Massachusetts a week ago due to a methodology change, and despite an 8.7% increase in testing. The overall modest improvement masks some deterioration in southern and western states that warrants close attention and could lead to renewed restrictions in the coming weeks (source: COVID-19 Tracking Project).
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
All index and market data are from FactSet and MarketWatch.
This Research material was prepared by LPL Financial, LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use – Tracking 1-05020983