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

Fed Rattles Markets, Internet Outages, Unemployment Data - What's Moving Markets

EconomyJun 17, 2021 05:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Peter Nurse

Investing.com -- The Federal Reserve shakes up the markets with a hawkish tone, with stocks and crude heading lower. Internet outages cause more disruption while U.S. unemployment data will be closely watched. Here's what's moving markets on Thursday, June 17th.

1. Fed takes a hawkish tone

The Fed disrupted the summer torpor that the markets had settled into by signaling on Wednesday that two rate hikes could be in the cards by the end of 2023, a year earlier than expected.

The central bank concluded its two-day policy meeting by keeping its interest rates and monthly bond purchases unchanged, as widely expected, but new projections saw 11 of 18 central bank officials point to two rate hikes of 25 basis points in 2023. This represented an abrupt change of thinking from the previous meeting when none of these officials were looking for hikes during that year.

At 6:30 AM ET (1030 GMT), the dollar rose to levels not seen for around two months, with the dollar index up 0.5% on the day to 91.642, while the benchmark 10 year U.S. Treasury yielded 1.56%, after hitting a high of 1.59% not seen since early March, from as low as 1.482% on Wednesday.

The Fed cited an improved economic outlook for this changed stance, with overall economic growth expected to hit 7% this year, adding that the 15-month Covid-19 pandemic was no longer a major restraint on the U.S. economy.

With U.S. inflation rising faster than expected and the economy recovering, the market had been expecting the central bank officials to begin discussing whether a timetable was needed for reining in its massive bond-buying program.

However, this hawkish stance “suggests that the QE tapering discussion could start a little earlier than thought and conclude more quickly,” said analysts at ING, in a note. “This means that all the focus will be on the Jackson Hole conference in late August as a possible date to formally acknowledge the need to taper.”  

2. Stocks lower after Fed update

U.S. stocks are seen opening lower Thursday, after the Fed's sudden shift took markets by surprise.

By 6:25 AM ET, Dow Jones futures were down 115 points, or 0.3%, S&P 500 futures were 0.4% lower and Nasdaq 100 futures dropped 0.5%.

Thursday’s losses would follow on from weakness during the previous session, when the broad-based S&P 500 closed 0.5% lower, the blue-chip Dow Jones Industrial Average dropped 0.8% and the tech-heavy Nasdaq Composite fell 0.2%.

The main Wall Street indices have bounced back sharply from the hefty losses seen at the start of the pandemic, with all three more than 30% higher over the last year and near record levels, helped in no small part by the fiscal and monetary largesse of the U.S. authorities.

In corporate news, Britain and the United States agreed Thursday a deal to resolve a trade dispute concerning Airbus (PA:AIR) and Boeing (NYSE:BA), an agreement that comes shortly after the European Union and the U.S. buried the hatchet after a near 17-year conflict over aircraft subsidies to the two manufacturers.

In terms of earnings, investors will digest numbers from computer software company Adobe (NASDAQ:ADBE) and food retailer Kroger (NYSE:KR), among others.

3. U.S. unemployment data

One of the factors that contributed towards the Fed turning more hawkish was the expectation of strong job creation over the summer months. 

The market will get its first view of labor market data following the Fed gathering later Thursday, with the weekly jobless claims numbers, at 8:30 AM ET (1230 GMT).

The number of individuals who filed for unemployment insurance for the first time in the U.S. is seen falling to 359,000 for the week ending June 5, the fewest since the pandemic began and beating 376,000 for the week before.

Continuing jobless claims, a measure of people receiving unemployment benefits for a while, are expected to fall to 3.430 million in the week ending June 12, from 3.499 million a week before.

The widely-watched U.S. nonfarm payrolls increased by 559,000 in May, according to data from the Labor Department earlier this month, a touch below the 650,000 expected.

While this figure still indicated healthy growth, the market should maybe look for this data point ramping up over the next couple of months given the apparent confidence of the FOMC members.

4. Cybersecurity worries

Major internet outages are becoming commonplace these days. 

Earlier Thursday, Australia's central bank, the postal service and several banks  were affected by internet outages, disrupting customer services and financial transactions.

The Reserve Bank of Australia was forced to cancel its operation to buy long-dated government bonds because of the associated technical difficulties.

Additionally, the websites of major U.S. airlines, American Airlines (NASDAQ:AAL), Southwest Airlines (NYSE:LUV) and United Airlines (NASDAQ:UAL) experienced disruptions early on Thursday, according to outage monitoring website Downdetector.

It’s unclear whether these two events are connected. Last week’s outage by a number of major websites, including the U.K. government’s site and many major news agencies, was traced to an issue at global website hosting service Fastly (NYSE:FSLY).

One of the topics U.S. President Joe Biden discussed with his Russian counterpart Vladimir Putin at their meeting in Geneva Wednesday was cybersecurity. 

This follows a series of recent ransomware attacks, linked to a group based in Russia, including an incident in May that shut down a pipeline that supplied fuel for much of the U.S. East Coast.

5. Crude prices slip on stronger dollar 

Crude oil prices weakened Thursday, falling from multi-year highs as the stronger dollar in the wake of the Fed meeting weighed, offsetting signs of a tightening market.

By 6:25 AM ET, U.S. crude was down 0.1% at $71.10 a barrel, after reaching its highest level since October 2018 the previous session, while Brent was down 0.1% at $73.24, falling from its highest level since April 2019.

Crude oil markets have soared this year, posting gains of well over 40% with demand recovering from the Covid-19 pandemic hit as successful vaccination programs have allowed the major global economies to reopen.

Helping the market has been the general weakness of the U.S. dollar as the Fed pointed to ultra easy monetary policies for a considerable length of time. However, this changed on Wednesday, and the greenback registered its largest single day gain in 15 months. 

A stronger buck makes oil priced in dollars more expensive in other currencies, potentially weighing on demand. 

Adding to the more cautious tone were comments from the Saudi Energy Minister Prince Abdulaziz bin Salman at a conference Wednesday, who stated that the oil market was “not out of the woods yet”, and the steady approach by the group of top producers in adding supply was paying off.

Still, losses have been small Thursday, certainly when compared to the recent gains, as the gains in demand have been readily apparent.

U.S. crude oil stockpiles dropped sharply last week, falling by 7.355 million barrels for the week to Jun. 11, according to the Energy Information Administration, as refineries boosted operations to their highest since January 2020. 

Additionally, daily refining rates in China, the world’s largest importer of crude, rose to a record high of 4.4% in May from the same month in 2020.

 

Fed Rattles Markets, Internet Outages, Unemployment Data - What's Moving Markets
 

Related Articles

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.
Comments (16)
JeremyDjSkeezy Selph
JeremyDjSkeezy Selph Jun 17, 2021 1:03PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Jeremydjskeezyselph Spotify Artist
Pratt Man
Pratt Man Jun 17, 2021 8:57AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
ahhh..they said they might raise rates two years from now. Oh ok..I'm selling everything and sticking my money in a matters. Keep your heads on straight everyone.
Jouni Matero
Jouni Matero Jun 17, 2021 8:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bad jobs data once again but no effect on market
ZS Beck
ZS Beck Jun 17, 2021 8:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Wait for another two weeks...Expiring unemployment and sending people to search for jobs if they want to receive it. The numbers will be much better. All lazy gig and other workers will be forced to go back to work
Mark Manley
Mark Manley Jun 17, 2021 8:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bad jobs data? Did you sleep thru that article? This is good jobs data. Take an econ class.
Notvery Goodathis
Peteymcletey Jun 17, 2021 7:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Biden seems to weaker than Trump on Putin
Patrecia Sapulette
Patrecia Sapulette Jun 17, 2021 7:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
no worries, biden told putin do not touch us facilities in the list. muahahahaaaa. *grab popcorn*
Pratt Man
Pratt Man Jun 17, 2021 7:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
that's a joke right?
David Xanatos
David Xanatos Jun 17, 2021 7:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Trump was basically dating Putin
Dave Jones
Dave Jones Jun 17, 2021 7:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
by putting more sanctions on them than any other president in history? Basically Trump put so much on there was nothing left to sanction. It only made Russia stronger!
alan gathers
alan gathers Jun 17, 2021 7:30AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The so-called market uses the fed reports to steal money out of the working mans 401 K.they should rename it the 401 cookie jar
William Smith
William Smith Jun 17, 2021 7:12AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Another 1st grade Reuters headline. The Fed did exactly as expected.
Mark Woollums
Mark Woollums Jun 17, 2021 7:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Glad Biden set Putin straight
Paulo Silva
Paulo Silva Jun 17, 2021 6:45AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
like always, people sell first, they ask question after. holding is not a option these days, i guess. diamond hands missed ...
Joel Bennett
Joel Bennett Jun 17, 2021 6:43AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
559,000 is not “a touch” below 650,000! Its a 14% miss.
Dave Jones
Dave Jones Jun 17, 2021 6:43AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
IKR LMAO!!!
Guidothekiller pimp
Guidothekiller pimp Jun 17, 2021 6:41AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Everything I read prior to the Fed meeting was exactly what they were expecting him to say. I read many articles that said they were hoping for the Fed to wait til 2023 before a rate hike. Did everyone get amnesia all of sudden?
Johnny Strong
Johnny Strong Jun 17, 2021 6:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Like Ark Investing Cathie Woods, buy on dip!
Duane Walker
Duane Walker Jun 17, 2021 6:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Well ...this should whipsaw the price of everything in the near term....
Vincent Li
Vincent Li Jun 17, 2021 6:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Buy the stocks.. Improving econony spend spend spend!!!
isaac joseph
isaac joseph Jun 17, 2021 6:09AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
unemployment data looks even more like a footage
James Andrews
James Andrews Jun 17, 2021 5:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What were they supposed to say, free money forever? 2023 is 2 years away, people just desperate for a catalyst and direction rn.
Ron Love
Ron Love Jun 17, 2021 5:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Exactly right, Im mocking anyone panicking that the Fed will raise the interest rate a few basis points in two years.
Miriam Morkhul
Miriam Morkhul Jun 17, 2021 5:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
We are wondering how it's even possible to raise rates in 2023, considering the annualized inflarion rate from now til then. Asset purchases of 120 billion/month will stop or get bigger until then?
La Min Ko Ko
La Min Ko Ko Jun 17, 2021 5:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
 
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