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Wall Street Loses Steam as Tech Stocks Head South

Stock MarketsAug 27, 2020 01:16PM ET
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© Reuters

By Geoffrey Smith 

Investing.com -- U.S. stocks lost momentum Thursday, as tech stocks led the S&P 500 and Nasdaq lower even after comments from the Federal Reserve initially ignited a rally.

Stocks jumped earlier in the day after Fed Chairman Jerome Powell laid out a change in the central bank's approach to policy-making that is likely to rule out any hike in interest rates for some years. 

But by 1:00 PM ET (1700 GMT), the Dow Jones Industrial Average was up 78 points, or 0.28%, giving up a gain of more than 250 points in the morning. The S&P 500 was flat and the Nasdaq Composite, after a series of record highs, was down 0.7%.

"“The Committee seeks to achieve inflation that averages 2% over time, and therefore judges that, following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation immediately above 2% for some time,” The Fed said in an accompanying statement. 

Analysts welcomed the move, which acknowledges the trouble the Fed has had in getting inflation up to the level that aligns best with its other goal, full employment. However, it now puts an extra onus on the central bank to achieve its goals.

 
"Simply making promises to allow future overshoots, via average inflation or price level-targeting, won't count for much without a shift in the current policy approach, so that markets can think that higher inflation is more likely," said Ian Shepherdson, chief economist with Pantheon Macroeconomics. 
 
 
Microsoft (NASDAQ:MSFT) stock hit an all-time high, rising 2.2% after CNBC reported that it could wrap up the acquisition of TikTok's U.S. operations within the next two days. 
 
Some of the biggest gainers from Powell's comments were beaten-down travel stocks who have had to borrow heavily to shore up their liquidity as the pandemic hit their cash flow. Just after trading began in the U.S., United Airlines (NASDAQ:UAL) stock was up 9.1%,  American Airlines (NASDAQ:AAL) stock was up 7.8%, and Southwest stock (NYSE:LUV) and Delta Air Lines (NYSE:DAL) stock rose just under 6%. Cruise operators also made big gain, with Norwegian Cruise Line (NYSE:NCLH) stock rising 9.2%, Royal Caribbean (NYSE:RCL) stock up 6.4%, and Carnival (NYSE:CCL) stock rising 7.6%.
 
On Wednesday, Carnival had confirmed that it would extend the suspension of some sailings through the first half of 2021, due to the pandemic.

The pandemic was also behind Abbott Laboratories 's (NYSE:ABT) 7.7% rise, after the Food and Drug Administration gave Emergency Use Authorization to its Covid-19 rapid testing kit. 

In the premarket session, stocks had barely reacted to data showing that initial jobless claims stayed stuck above 1 million for another week last week, while continuing claims fell less than hoped. The news was somewhat offset by an upward revision to - admittedly historical - second-quarter gross domestic product data. Of more immediate importance was a rise in pending home sales in July to their highest level since 2005, in fresh evidence of the housing boom triggered by the pandemic and the attendant cuts in interest rates.

Wall Street Loses Steam as Tech Stocks Head South
 

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Comments (24)
Musical Critic
Musical Critic Aug 27, 2020 9:21PM ET
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Powell will be the most cursed person by the next generation for screwing up world economy.
Musical Critic
Musical Critic Aug 27, 2020 9:18PM ET
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US economy contraction biggest in 73 years. That is not just something. It is something very very serious!
Mark Manley
Mark Manley Aug 27, 2020 2:18PM ET
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I realize that you rabidly liberal hacks want desperately to tank this bull market, but we're all tired of the lies, liberal media just needs to pack up and go home
Michael Henderson
Michael Henderson Aug 27, 2020 2:18PM ET
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Keep your head wrapped in that aluminum foil man. I’m going to buy some RAI & AA shares.
Jack Epstein
Jack Epstein Aug 27, 2020 2:03PM ET
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Wrong again! Is this ost meant to be news? Or are you talking down the .market and the economy?
Raksaksa Tonne
Raksaksa Tonne Aug 27, 2020 1:45PM ET
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There's plenty of inflation. Just look at stock valuations! Never been higher, no matter how you slice and dice it.
Nick Lee
Nick Lee Aug 27, 2020 12:56PM ET
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You are now watching the impending demise of American economy. This short sighted decision made by Fed will in no doubt underminte the fundamentals of our economy and nation as a whole. Easy money always have led to painful consequences and history always proved right. Buckle up everyone. Big wave is coming.
Kenny Venezia
Kenny Venezia Aug 27, 2020 12:20PM ET
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he wants inflation? well, he gonna have inflation, then stagflation and depression. Hope you are sure of what your doing Jay, bc I see a lot of pain for the American people for years to come
Jack Zhang
Jack_A Aug 27, 2020 12:20PM ET
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inflation is a good way for government robbing citizens, because they can print that extra inflated.
Hue Jazz
Hue Jazz Aug 27, 2020 11:56AM ET
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I can’t wait until “inflation” runs hot, forcing them to choose to either to save the dollar or the markets. Fun times ahead!
Edward Chong
Edward Chong Aug 27, 2020 11:56AM ET
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are u ok ? there will be no inflation its juz an excuse. how will there be inflation when spending is weak?
Wayne Ng
Wayne Ng Aug 27, 2020 11:56AM ET
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I support your view
omer rehmat
omer rehmat Aug 27, 2020 11:56AM ET
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EXACTLY!Soon aftar that tensions between Usa and China will rise again!Because there’s no soil left to invade for money and natural resources.
Brady Murray
Brady Murray Aug 27, 2020 11:56AM ET
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nah. Communist China invading Africa as we speak. plenty to go.
perplexed76 .
perplexed76 . Aug 27, 2020 11:24AM ET
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Easy money is good for everyting virtual, but easy money means everything real is in trouble.
Robert Flores
Robert Flores Aug 27, 2020 11:24AM ET
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Not if you own anything real
jj mm
jj mm Aug 27, 2020 11:24AM ET
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if you have any other idea of how to boost the economy....
Michael Henderson
Michael Henderson Aug 27, 2020 11:24AM ET
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jj mm boost the economy or boost stock prices? Clearly stocks dont need any more help. However, there are millions without jobs and small business galore is now destroyed because once again our elected officials went with trickle down economics which after 40 years has created a 1920’s style wealth divide. No wonder civil unrest is growing and will continue to do so.
Space Lord
Space Lord Aug 27, 2020 11:17AM ET
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Easy money
Kaveh Sun
Kaveh Sun Aug 27, 2020 10:40AM ET
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This is a copy of Japanese. Japan has stay in no growth for decades. They have negative rates now.
Musical Critic
Musical Critic Aug 27, 2020 10:38AM ET
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The US has gone into a spiral disaster and is unable to get out of it.. The only thing that can happen now is.. no not burst.. IMPLODE! u know shrink to ZERO.
king michael
king michael Aug 27, 2020 10:27AM ET
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Obama used less than $10 trillion in 8 years to recover economy from deep financial crisis and Trump spend over $13 trillion in less than 4 years to create a economy mass and stock market bubble. What an bankruptcy guy.
Luu Hung
Luu Hung Aug 27, 2020 10:27AM ET
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True.
Kaveh Sun
Kaveh Sun Aug 27, 2020 10:27AM ET
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U r full of it. From jan 08 to jan 16 debt was from 10t to 20t. That is 10t under Obama. Now usa debt is 24t.
king michael
king michael Aug 27, 2020 10:27AM ET
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Kaveh Sun  Please check out the government number now, it is well over $26 trillion now and many proposals are forming in whit house on a lot more debt issuing.
Kaveh Sun
Kaveh Sun Aug 27, 2020 10:27AM ET
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king michael ok that is only 6t. U threw up 13t.
omer rehmat
omer rehmat Aug 27, 2020 10:16AM ET
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How is that dollar still getting higher ?
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Eivind Martinsen
Eivind Martinsen Aug 27, 2020 10:16AM ET
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Because there will be no inflation, just like the past 15 times the Fed and "bond kings" were screaming inflation. QE is not money printing and does not create inflation. One would think people would understand this after watching QE failing to achieve anything for 30 years.
Ben gunnell
Ben gunnell Aug 27, 2020 10:16AM ET
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Eivind Martinsen Do you know why it doesn’t cause inflation. Because 99% of the stimulated funds go into the elite top .0001% coffers. This is why it’s not fliltered back into the economy causing excess inflation. They are all criminals.
omer rehmat
omer rehmat Aug 27, 2020 10:16AM ET
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IceIce Baby And how’s that they suddenly started to suffer more after powell’s speech ?
Eivind Martinsen
Eivind Martinsen Aug 27, 2020 10:16AM ET
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No. Just no. I don't like the system as it currently works, but the "stimulus" is pure psychology. It applies to equities only. Not a trace of "stimulus" in the real economy or in treasury yield curves. When the illusion is shattered the investors still in the equity market will not have a good time, rich or otherwise.
Robert Flores
Robert Flores Aug 27, 2020 10:16AM ET
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Ben gunnell actually, that is a form of inflation, but not pmi, rahter financial asset inflation
Notvery Goodathis
Peteymcletey Aug 27, 2020 10:14AM ET
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Biden wins, market does an opposite of 2016. initial 5% pop into 70% drop
Tre Hsi
Tre Hsi Aug 27, 2020 10:14AM ET
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you based on that what?  the voices in your head?........during the Obama/Biden years stock markets nearly tripled, GDP grew 8 years in a roll, unemployement went from 10% to 4%........
Hayrettin Cetinturk
Hayrettin Cetinturk Aug 27, 2020 10:11AM ET
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i feel a big crash is coming. i felt it also in january. you cand check my comments. i said stay away of stocks and i was short.
Peter South
Peter South Aug 27, 2020 10:11AM ET
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No crash, just correction. We might see it as early as next week.
Eivind Martinsen
Eivind Martinsen Aug 27, 2020 10:11AM ET
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The next two months will be interesting. Fairly certain the Q3 bottleneck will wreck havoc with the repo markets and we will get a huge spike in the dollar with a crash in everything else.
Hayrettin Cetinturk
Hayrettin Cetinturk Aug 27, 2020 10:09AM ET
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they are in trouble and they dont know how to get out
Luu Hung
Luu Hung Aug 27, 2020 10:09AM ET
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They know bro. Just print more noney. Everybody happy lol
Eivind Martinsen
Eivind Martinsen Aug 27, 2020 10:09AM ET
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They aren't printing money though. QE is not and has never been inflationary.
king michael
king michael Aug 27, 2020 10:05AM ET
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All the money printed by Powell and Trump flow into stock market which is seriously damaging real economy as it makes no sense at all to invest any money in real economy. Are Powell and Trump doing such detrimental things on purpose?
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Chi zhang
Chi zhang Aug 27, 2020 10:05AM ET
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They would print all the money needed to keep the market high, otherwise hurting reelection. That's the only reason I still have not sold all my holdings, lol
Chi zhang
Chi zhang Aug 27, 2020 10:05AM ET
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They would print all the money needed to keep the market high, otherwise hurting election. That's the only reason I still have not sold all my holdings, lol
Eivind Martinsen
Eivind Martinsen Aug 27, 2020 10:05AM ET
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QE is not money printing.
Dronio Stoica
Dronio Stoica Aug 27, 2020 10:05AM ET
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Eivind Martinsen Where did the stimulus money come from? Thin air? Congress/Fed work hand in hand. Q/E is only one part of the big pic. Inflation is not being accurately reported. It is way up...
Tre Hsi
Tre Hsi Aug 27, 2020 10:05AM ET
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Notvery Goodathis  probably has to go all the way back to 2008 under Geroge W
Jo Va
Jo Va Aug 27, 2020 10:00AM ET
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All of this is nothing more than building a house of cards higher while a pandemic ravages our nation and economy.
Anonymous Vendetta
Anonymous Vendetta Aug 27, 2020 9:58AM ET
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dont bluff your economy. thats just a number. data still weak
John Smith
John Smith Aug 27, 2020 9:53AM ET
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and that school teacher who is asking questions to powell is asking directly for money for affine foundations instead of money given wage level or economic questions, what a shame
novah Audio
novah Audio Aug 27, 2020 9:48AM ET
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GBPUSD direction.???? Like is UP
IceIce Baby
IceIceBaby Aug 27, 2020 9:47AM ET
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Print more money, please, and give it to the people. So they can spend it on stock exchange. :)
Bill The Bill
Bill The Bill Aug 27, 2020 9:45AM ET
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America is great again
Samui Lo
Samui Lo Aug 27, 2020 9:45AM ET
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Riiiiight this is the biggest transfer of wealth in American history. Printing money and inflation means the indebted American public pays more for it's groceries and it's dollars are worth less to get us out of this crisis while stock market and ultra wealthy get richer. Shows how some of you have no idea what is going on
adam vandervelde
adam vandervelde Aug 27, 2020 9:45AM ET
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you think George Floyd being the catalyst for the BLM movement going gangbusters was by people power? Narritives are chosen to hide the real agendas. BLM does not hurt one billionaire.
 
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