Stocks turn positive after Fed says it will keep stimulus coming for years: June 10, 2020

By CNN Business

Updated 5:52 p.m. ET, June 10, 2020
36 Posts
Sort byDropdown arrow
4:04 p.m. ET, June 10, 2020

Nasdaq secures third straight closing record

From CNN Business' Anneken Tappe

The Nasdaq Composite closed at an all-time high for the third day in a row on Wednesday. It was the first time the Nasdaq finished above 10,000 points.

Beyond the tech-heavy index, stocks finished lower.

The market briefly turned higher after the Federal Reserve committed to ultra-low interest rates for a longer period, and the central bank’s projections showed no planned rate hikes this year or in 2021. Even in 2022, the majority of policymakers believe rates will remain at current levels.

  • The Dow finished 1% or 282 points, lower.
  • The S&P 500 ended down 0.5%.
  • The Nasdaq climbed 0.7% to a new all-time closing high. 
3:48 p.m. ET, June 10, 2020

JK the Dow is down again

From CNN Business' David Goldman

Please ignore that blog post I wrote an hour ago.

The modest stock rally during the 2 pm hour has turned into the modest stock decline of the 3 pm hour. Despite encouragement that the Fed believes it will keep the stimulus bar open all night, Federal Reserve Chairman Jerome Powell also noted during his press conference that the economy remains unstable and millions of people will remain out of work for quite some time. That's not great news.

The Dow was down 140 points

The S&P 500 fell 0.1%

The Nasdaq is still up, though. It surged 1.1% to yet another record high.

3:45 p.m. ET, June 10, 2020

Millions of people won't get their old job back

From CNN Business' David Goldman

The labor market is bouncing back in America. But don't get too excited: many people will never return to what they did before the pandemic.

"There will be a significant chunk ... well, well into the millions of people, who don't get to go back to their old job and there may not be a job for them for some time," predicted Federal Reserve Chairman Jerome Powell.

Although he didn't want to provide a precise estimate, he noted some people in industries that have been devastated by coronavirus won't return to work for years. If people don't return quickly to restaurants, for example, it will be hard for waiters and kitchen staffs to return to their old jobs -- or indeed any food service position.

"When people lose a job, if they can find a job in their own industry, usually the fastest way, is if they know other people in that industry," Powell noted.

That's unlikely to happen for millions of people.

"It's very tough on their lives," he said.

3:23 p.m. ET, June 10, 2020

The Fed's not going to react to a single data point ... but, yeah, the worst may be over

From CNN Business' David Goldman

Will the economy get better later this year? Mayyyyyybe.

Is the unemployment rate only going to go down from here? Proooobbbbablyyyy.

Federal Reserve Chairman Jerome Powell was hesitant to predict. But he was super encouraged by May's surprisingly strong jobs report, and he thinks the worst may be behind us.

"The thing is, we're not going to overreact to a single data point. We're going to be very careful about reaching any conclusions about good data or bad data," he said.

Still, Powell allowed that he "think[s] there's a possibility that the bottom has come in the labor market. We don't know that yet. We'll know more as we go forward."

3:21 p.m. ET, June 10, 2020

The Fed gave the market what it wanted, analyst says

From CNN Business' Anneken Tappe

Stocks briefly jumped higher today after the Fed announced rates would stay lower for longer -- until the economy is back on its feet.

Now the Dow and the S&P 500 are back in negative territory, but the Nasdaq Composite remains on track for its third straight all-time closing high.

The FOMC hit bull’s eye today in terms of delivering exactly what the market was expecting, no more, no less," said Seema Shah at Principal Global Investors.

The key message was that rates would stay low until at least 2022, Shah said: "Markets should like today’s decision, reassuring them that stimulus is still at play and giving a 'nod' to a continued equity market rally.” 

3:21 p.m. ET, June 10, 2020

The government is throwing a ton of money at this problem. The Fed's not sure it's enough

From CNN Business' David Goldman

We went from the lowest unemployment rate in 50 years to the highest in nearly 90 years. In a matter of weeks.

"Extraordinary," Jerome Powell said.

That's why the government's response to the economic crisis has been "large, forceful, and very quick," Powell added. A $3 trillion stimulus bill, making up 14% of US GDP, is "in a class by itself." And the way it was introduced was innovative, Powell declared.

And yet...

"Everyone can see it's big. Is it going to be big enough? That is the question," Powell said.

A number of people, through no fault of their own, may never return to work because the pandemic won't allow it. That number could be in the millions, Powell noted.

"We want those people back in the labor force and getting jobs, and they're going to need possibly -- probably -- further support," Powell said. "It's possible we will need to do more, and it's possible Congress will need to do more."

3:10 p.m. ET, June 10, 2020

Nope, this isn't another Great Depression, says Jerome Powell

From CNN Business' David Goldman

The current recession is NOT like the Great Depression. Nononononononono.

Sure, unemployment's only comparison is the Great Depression. And businesses across the country are closed. And many people are struggling to buy food. But Federal Reserve Chairman Jerome Powell doesn't see any similarities.

"I don't think that the Great Depression is a good example or likely outcome for a model of what's happening here at all, I really don't," he said. "There are so many fundamental differences."

Powell noted that the government's response to the economic calamity during the coronavirus pandemic has been "so fast and so forceful."

The origin of the disaster was also different: The current recession was essentially man-made: We decided to shut down a healthy economy

But that doesn't mean we're out of the water -- the economy still faces challenges. But it was a much healthier patient when it was brought into the ER.

"The financial system this time was in very good shape, much better capitalized," he said. "That's different that's what was happening around the time the Great Depression started."

2:58 p.m. ET, June 10, 2020

Jay Powell eats some humble pie

From CNN Business' David Goldman

The Fed's federal funds rate aims to balance employment and inflation. Ideally, unemployment will be low, and inflation will be at around 2%.

But during the nation's longest-ever expansion, the Fed was never really able to get to that target. Inflation remained stubbornly low, squeezing people's paychecks and purchasing power.

"We were close for the last couple of years, but we never got there," Federal Reserve Chairman Jerome Powell said during a press conference. "I think we have to be humble about our ability to move inflation up."

2:56 p.m. ET, June 10, 2020

The Fed isn't even thinking about raising rates

From CNN Business' Anneken Tappe

The Federal Reserve has committed to keeping interest rates at ultra-low levels until the economy is back on its feet.

We’re not thinking about raising rates, we’re not even thinking about thinking about raising rates," Fed Chairman Jerome Powell told reporters during Wednesday's press conference.

The "dot plot", which shows the monetary policy expectations of policy makers, doesn't show an interest rate increase until 2022. And even then, most FOMC members expect rates to remain at today's low level.