Pre-Market

Major Indexes Flat as a Pancake

We saw some fluctuation among the Dow, Nasdaq and S&P 500 in Hump Day trading, climbing notably in the morning hours, only to lag most of the rest of the day. At the close, these three indexes were about as flat as you could expect: Dow +0.05%, Nasdaq -0.07% and the S&P +0.15%. Only the small-cap Russell 2000, which outperformed its larger-index brethren through Q1, came in at -1.6% on the day.

Statements from a few important groups made their way through market discourse Wednesday, with the minutes from the Federal Open Market Committee (FOMC) released from its March meeting made public. As always, the committee cited its dual mandate — full employment and a targeted inflation rate of 2% — and said it would not be making any changes to current policy until these desired outcomes are reached.

Currently, though the labor market has created more than 1.6 million new jobs over the past three months total and the 10-year bond rate had nearly doubled from its sub-1% levels, the FOMC is awaiting manifestations of the booming economy to hit the economic metrics before they stop the $120 billion in monthly bond purchases or raising interest rates from near-zero. At this point, the U.S. labor market is still down 9 million jobs from February 2020, and the 10-year has now lagged at around 1.67%.

The International Monetary Fund (IMF) has announced it will boost its reserves $650 billion and put a freeze on debt servicing, in its pursuit of assisting with pandemic hurdles in much of the world. The IMF also turns its attention to climate change initiatives, which had softened considerably during the Trump years. The global growth forecast for 2021 is 6%, according to the IMF, indicating a recessionary environment in many places while the U.S. GDP is expected to reach 6.5% for the year.

In a statement released today from the G20 summit, discussed was the idea that U.S. Treasury Secretary Janet Yellen openly discussed earlier in the week: a minimum corporate tax rate, particularly for giant global corporations such as Alphabet GOOGL and Facebook FB. The G20 expects to have a deal ready by its summer meeting this July. Elsewhere, Mexico and Argentina lobbied for relief from economic hardships due to the prolonged pandemic, but Italian leadership did not move toward an immediate solution.

Thursday brings Fed Chair Jay Powell’s commentary on the global economy, in which it is expected he will discuss many of these same concerns as the IMF and G20. We also see new weekly jobless claims figures for last week and the previous week. Two weeks ago, new claims had hit a pandemic-era low beneath 700K, but surged back to 719K in last week’s headline. Continuing Claims kept its mostly orderly decline intact, which is partially due to longer-term unemployed absorbed into the PUA program.

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