U.S. stocks ended lower on Wednesday as investors weighed a grim outlook on the economy for the near-term by Fed Chair Jerome Powell as federal and state officials across the country are actively engrossed in reopening the economy gradually.
The three major indices — the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite — closed in the red on Wednesday. The Dow Jones Industrial Average closed at 23,247.97 after declining 2.2%, the broader S&P 500 reached 2,820.00 after decreasing 1.8% and the tech-laden Nasdaq Composite hit 8,863.17 after inching 1.6% lower.
The fear-gauge CBOE Volatility Index (VIX) rose 1.5% to close at 35.81 on May 13. Finally, decliners outnumbered advancers on the NYSE by a 7.29-to-1 ratio.
Powell’s Economic Outlook for Near-Term is “Highly Uncertain”
On May 13, the Fed Chair said that there are chances of a longer-than-expected recession in the near term provided the Congress doesn’t inject further fiscal stimulus.
Powell spoke through a scheduled video conference with the Peterson Institute for International Economics on Wednesday.
Powell noted that the “path ahead is both highly uncertain and subject to significant downside risks” as the coronavirus raised many questions such as how quickly can it be brought under control and can new infections be avoided as the lockdown comes to an end etc.
Powell said that it was up to the Congress and the administration to consider further fiscal stimulus, stating that “additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”
The Fed had cut interest rates in mid-March to near zero and put into practice a series of relief measures that support lending and liquidity. Powell said that the Fed’s response to the crisis "may not be the final chapter."
However, the Fed chief rejected the idea of negative rates stating that, “I know there are fans of the policy, but for now it’s not something that we’re considering.” (Read more)
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Speaking of economic news, according to the U.S. Bureau of Labor Statistics, the Producer Price Index for final demand declined 1.3% in April. This is the largest decline since the index began in December 2009.Prices for final demand minus foods, energy and trade services slid 0.9% in April, which was also the largest decline since the index was introduced in September 2013.
Stocks That Made Headlines
Cisco Q3 Earnings and Revenues Surpass Estimates
Cisco Systems (CSCO - Free Report) reported third-quarter fiscal 2020 non-GAAP earnings of 79 cents per share that beat the Zacks Consensus Estimate by 9.7% and improved 1% year over year. (Read more)
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