US stocks rise after Fed promises low rates for years: September 16, 2020

By CNN Business

Updated 5:08 p.m. ET, September 16, 2020
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2:44 p.m. ET, September 16, 2020

Jerome Powell: Wear a mask and save the economy

From CNN Business' David Goldman

Mask wearing continues to be sore subject for many Americans, but Federal Reserve Chairman Jerome Powell says it could save the economy.

"All of us have a role to play in our nation's response to the pandemic. Following the advice of the public health professionals, to keep appropriate social distances and to wear masks in public will help get the economy back to full strength," Powell said. "A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities."

Want that mom & pop shop around the corner to survive? Wear a mask. Want to get your job back? Stay socially distant, the Fed argues.

Powell and the Fed have long said that the recovery will depend almost entirely on the path of the virus. As long as it continues to infect Americans, the economy will not return to where it was earlier in the year.

2:21 p.m. ET, September 16, 2020

Fed pledges to keep interest rates near zero for years

From CNN Business' Anneken Tappe

The Federal Reserve committed Wednesday to do more to help the US economic recovery, promising more asset purchases and lower interest rates for even longer than it previously expected.

The Federal funds rate remained unchanged at zero to a quarter percentage point, and will stay there until America's labor market has recovered "consistent with the Committee's assessments of maximum employment" and the inflation rate has risen to 2%, and is on track to exceed that level for some time.

Given the country is still down 11.5 million jobs since February and the consumer price inflation rate over the past 12 months stood at 1.3% last month, this seems like a long way off.

A survey of Fed officials showed the group expects rates to remain at or near zero through 2023 -- a year later than the previous survey conducted in June.

The Dow surged 300 points, or 1.6%, and the S&P 500 was 0.6% higher.

2:09 p.m. ET, September 16, 2020

Dow initially jumps about 300 points after Fed decision ... but then cools off

From CNN Business' David Goldman

The Fed announced that it would keep rates low for years, doubling down on its new policy first announced in Jackson Hole last month.

The Dow initially spiked, rising about 300 points. It's now up about 200.

1:14 p.m. ET, September 16, 2020

Scaramucci: stocks have more room to run, regardless of who wins in November

From CNN Business' Anneken Tappe

With only 48 days remaining until the election, investors are worried about expected volatility in November and what it will do to their portfolios.

"I'm a big believer in a four-corner offense," said Anthony Scaramucci, founder and managing partner of SkyBridge Capital, told Alison Kosik on CNN Business' digital live show Markets Now.

That means a stock and bond portfolio, some hedge fund exposure as well as some commodities, such as gold. Skybridge is also looking at digital currencies, Scaramucci said.

After the drastic March selloff when the US lockdown started, investors should remember how fast this market can move. That's why staying diversified is important.

"Stocks have room to run, no matter what their valuation is," he added, in part because there aren't many other attractive places to put money for investors.

Meanwhile, President Donald Trump "sees the stock market going up as a sign that he'll get re-elected," Scaramucci said, but it's not that simple.

"Ultimately, this is a referendum on whether people think their families are better off than they were four years ago," he said.

Trump has warned that a Biden win could hurt the market, but "he's completely wrong about that," Scaramucci said.

The Federal Reserve, whose policies have bolstered the stock market for months, will maintain its current path no matter who wins the White House in November, he said.

1:03 p.m. ET, September 16, 2020

Blackstone warns of Japanese-style 'lost decade' for stocks

From CNN Business' Matt Egan

One of Wall Street's leading thinkers fears the stock market could be facing a Japanese-style "lost decade" following blockbuster recent returns.

Tony James, executive vice chairman at Blackstone (BX), told CNBC on Wednesday that "disappointing" long term earnings growth combined with lower multiples could cause "anemic equity returns over the next five to 10 years."

"I think this could be a lost decade in terms of equity appreciation," James said, referring to Japan's experience with weak economic growth in the 1990s.

The Blackstone exec, who recently co-wrote a perspectives piece on America's retirement savings crisis for CNN Business, pointed to "economic headwinds" including the risk of higher interest rates, tax hikes, "deglobalization" and increased costs.

If the warning from James spooked investors, they had a funny way of showing it.

The Dow is up another 200 points, or 0.7%, today.

1:07 p.m. ET, September 16, 2020

'This is a big, giant bull market,' strategist says

From CNN Business' Anneken Tappe

Wall Street has had a few choppy weeks, as big tech sold off rapidly. But fret not, this bull market isn't over, according to Brian Belski, chief investment strategist at BMO Capital Markets during CNN Business' digital live show Markets Now.

"This is a big giant bull market and you should focus on the biggest and best companies in the world and they're here in the United States," he said.

"Risk assets and equities will keep going up," Belski said.

Investors are awaiting the Federal Reserve's policy decision in about an hour. Interest rates are likely to stay low for years, so investors have to adjust their portfolios accordingly, Belski said. Consumer discretionary and technology stocks will be the way to go here, he added.

12:33 p.m. ET, September 16, 2020

Return of Big Ten football is a financial touchdown for DraftKings

From CNN Business' Paul R. La Monica

The famed Big Ten college football conference, home to "THE" Ohio State University, Michigan, Michigan State and Penn State, announced Wednesday that its season will kick off the weekend of October 23-24. The Big Ten had previously said there would be no games until the spring due to the Covid-19 pandemic.

President Trump cheered the news on Twitter. But he wasn't the only one who was happy. Shares of sports betting company DraftKings and casino owner Penn National Gaming, which owns a big minority stake in Barstool Sports, both scored on the news.

DraftKings (DKNG) was up 10% while Penn National (PENN), which just soft launched a Barstool-branded betting app in Pennsylvania, was up 2%. Both stocks have soared this year, particularly after the return of major live sports this summer.

Shares of both companies really took off in the late summer as gamblers geared up for the NFL football season, which started last week.

So the return of Big Ten college football may wind up being a nice added bonus. DraftKings CEO Jason Robins told me in August that his company's latest outlook assumed that there would be no revenue from gambling on NCAA football games this year. That clearly won't be the case.

DraftKings -- along with FanDuel, the sports betting app owned by UK-based Flutter Entertainment (PDYPF) -- are in a fierce battle with each other as well as Barstool and other gambling companies like casino owner MGM (MGM).

DraftKings also just announced a partnership with the NY Giants football team Wednesday -- as well as a recent deal with Disney's (DIS) ESPN and casino company Casears Entertainment (CZR).

12:09 p.m. ET, September 16, 2020

Another 850,000 jobless claims are expected tomorrow

From CNN Business' Anneken Tappe

Weekly claims for unemployment aid have been declining (yay!), but the pace has been that of treacle (boo!).

Tomorrow's report looks like it will fit right in: Another 850,000 first-time claims for jobless benefits are expected in tomorrow's report from the Labor Department. That would be a 34,000 claim drop from the prior week.

First things first: Every person who can go back to work after being laid off in the wake of the pandemic is a win. But the pace of the jobs recovery has economists sweating.

Continued jobless claims, counting workers who have filed for benefits for at least two weeks in a row, are still expected at 13 million, down from 13.4 million in the week prior.

Worse still, these estimates don't include claims filed under the government's various other jobless aid programs, such as the Pandemic Unemployment Assistance program, which provides benefits for those who aren't usually eligible like the self-employed. These PUA benefits have been ticking higher in recent weeks.

12:07 p.m. ET, September 16, 2020

Stocks stay in the green at midday

From CNN Business' Anneken Tappe

It's midday and stocks remain in positive territory, even though the Nasdaq Composite is holding on for dear life.

After opening higher, the tech-heavy index has given up its gains and is flat, as the technology sector is the underperformer of the day.

The Dow is up 0.8%, or 222 points, while the broader S&P 500 is up 0.5%.