Stocks finished lower in the U.S. on Wednesday but the continuing story is that the “safety trades” of buying Treasuries and gold continue to be stronger than a somewhat soft equity market might otherwise indicate.
On Wednesday, the Dow lost 59 points, the S&P 500 was down about 9, and the Nasdaq lost 30 points. The tech-heavy Nasdaq was the biggest percentage loser, falling more than 0.5%.
Markets had little in the way of news to contend with during the day, while investors and most of the public began to move on from obsessing over United Airlines’ (UAL) bungling of the removal of a passenger from a flight on Sunday. Shares of United, after having dropped as much as 4% on Tuesday, lost 1% on Wednesday.
On Thursday, which is the final full trading day of the week in the U.S. as markets will be closed for Good Friday, we’ll get major U.S. banks unofficially kicking off first quarter earnings season.
As Yahoo Finance’s Nicole Sinclair noted this week, financials are expected to be a standout during an earnings season ahead of which investor expectations are high, with S&P 500 earnings forecast to grow 10.5%.
Elsewhere on the calendar we will also get the weekly report on initial jobless claims and the latest reading on consumer confidence from the University of Michigan.
Among the headlines were Trump talking down the U.S. dollar, saying that the currency was “too strong” which sent the dollar index lower.
“I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me,” Trump told the Journal.
“But that’s hurting—that will hurt ultimately. Look, there’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good… It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.”
Elsewhere in his comments, and perhaps even more importantly for markets, Trump did not say definitively that current Federal Reserve Chair Janet Yellen would not be nominated for a second term when her current term expires in February.
Trump said that Yellen was “not toast,” and said, “I like [Yellen], I respect her… it’s very early.”
And after having criticized the Fed’s low interest rate policies as having been politically motivated and carried out at the directive of then-President Obama during the campaign, Trump said, “I do like a low-interest rate policy, I must be honest with you.”
Neil Dutta, an economist at Renaissance Macro, argued these comments from Trump indicate Gary Cohn, a Goldman Sachs alum and the president’s chief economic advisor, is moving into the driver’s seat on Trumponomics.
“Nationalism is giving way to pragmatism,” Dutta wrote. “I think the odds of Janet Yellen being here next year are rising and I do think that is bullish for risk appetite.”
In other words, Yellen remaining as Fed chair and the Fed’s policy framework remaining consistent would be good for stocks and global financial markets more generally.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
Read more from Myles here:
- Trump says Janet Yellen is ‘not toast’
- Jamie Dimon thinks America’s ‘secret sauce’ is at risk
- Here’s what’s next for stocks now that the Trump trade is over
- A top Fed official isn’t worried about the slowdown in bank lending
- Why you should always be ready for a big, scary stock market sell-off