Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

The Fed's Got Stock Traders' Backs

By Zacks Investment ResearchStock MarketsJul 14, 2020 05:34AM ET
www.investing.com/analysis/the-feds-got-stock-traders-backs-200530714
The Fed's Got Stock Traders' Backs
By Zacks Investment Research   |  Jul 14, 2020 05:34AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

A big reversal from Monday’s regular trading session saw the major indexes rush back up into the green, with the Dow gaining another 2.1%, or 556 points, the S&P 500 +1.34% and the Nasdaq +0.94%. Aside from a couple better-than-expected Q2 earnings results from JPMorgan JPM and Citigroup C this morning, the big boost came from Fed Governor Lael Brainard, who spoke at a webcast hosted by the National Association for Business Economics.

In her address, Brainard said that the Fed should utilize large-scale asset buys to keep the economy liquid amid a “thick fog of uncertainty” relating to the coronavirus pandemic, and should be practiced for a “sustained” period. She also said the ongoing economic recovery “will face headwinds for some time,” as we see this week with a re-shutdown of businesses in California amid a spike in new COVID cases.

While this doesn’t necessarily sound like good news, exactly, the Fed is once again saying it sees what the economy will potentially be going through, and is willing to do what it takes to make sure it will not seize up as a result of a turbulent re-entry to a “normal” domestic business existence. This was enough to keep indexes bidding up; the Down is now a mere 10% off its all-time highs, while the S&P 500 is only 6% off the pace. The Nasdaq, which hit new all-time highs mid-day yesterday before the big selloff on the California shutdown news, remains about 3% off new highs.

One stock up big Tuesday was Align (NASDAQ:ALGN) Technologies ALGN, which rose nearly 11% — nearly the entire gains for the stock in the month of June — though the reason was not due to any earnings surprise (Align reports Q2 a week from tomorrow), but from a strike call option expiring Friday, at $300. Tesla (NASDAQ:TSLA) TSLA, however, rose again on a fresh price target from Piper Sandler (NYSE:PIPR), which now expects Tesla to climb to $2322 per share, more than 50% higher than the current stock price. Tesla is having an unbelievably strong trading year, and saw Robinhood app traders add Tesla positions at a rate of 10K per hour for a portion of the past day.

Brainard’s comments today — as well as those similarly remedy-minded remarks from St. Louis Fed President James Bullard — now put the ball squarely into Congress’ court. Many relief programs passed earlier for COVID-related struggles in terms of businesses shuttering and millions of layoffs are due to expire within the next month; without more stimulus — especially with a renewed shutdown currently in the works in the U.S.’s most populous states — the economy may be in for more hurt than most investors are pricing in at the moment.

Questions or comments about this article and/or its author? Click here>>

Is the Market Rigged?

Computer-driven High-Frequency Traders (HFTs) manipulate the market thousands of times a day – and their gains come at the expense of human investors. Zacks has mounted a Counterstrike to take advantage of the best profit opportunities created by HFTs. Access to these recommendations must be limited; the doors close soon.

See Counterstrike Trades Now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

JPMorgan Chase Co. (NYSE:JPM): Free Stock Analysis Report

Citigroup Inc. (NYSE:C): Free Stock Analysis Report

Align Technology, Inc. (ALGN): Free Stock Analysis Report

Tesla, Inc. (TSLA): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Fed's Got Stock Traders' Backs
 

Related Articles

The Fed's Got Stock Traders' Backs

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email