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Wall Street continued to monitor developments in U.S.-Iran relations Thursday, following signs that the Trump administration would respond to this week’s Iranian missile attacks with sanctions rather than military action.
4:08 p.m. ET: Dow closes in on 29,000 as U.S.-Iran tensions ease
Here’s where the major indices settled as of 4:08 p.m. ET:
S&P 500 (^GSPC): +0.67% or +21.65 points to 3,274.70
Dow (^DJI): +0.74% or +211.81 points to 28,956.90
Nasdaq (^IXIC): +0.81% or +74.18 points to 9,203.43
Crude oil (CL=F): -0.08% or -0.05 to 59.56 a barrel
Gold (GC=F): -0.45% or -7.00 to 1,553.20 per ounce
2:48 p.m. ET: Fed’s Kaplan, Evans say interest rates may hold for a while
Two Federal Reserve presidents weighed in on rates today, saying they may remain unchanged for sometime.
The Fed’s balance sheet may be a problem according to Dallas Fed President Robert Kaplan, who said he wants to explore options to restrain growth in securities holdings, Reuters reports.
"I do think the growth in the balance sheet is having some impact on the financial markets and on the valuation of risk assets,” Kaplan told Reuters. “I want to be cognizant of not adding more fuel that could help create further excesses and imbalances."
Separately, Chicago Fed President Charles Evans said such a hold could last all year, Reuters reports.
"My expectation is we could go through the entire year without rate changes," Evans said at a panel in Wisconsin.
12:46 p.m. ET: Here’s the message the Fed wants markets to hear, El-Erian says
Markets will ignore the headlines out of Washington, D.C., as long as the Federal Reserve continues to provide liquidity and keep interest rates near historically low levels, said Allianz Chief Economic Adviser Mohamed El-Erian.
“We are gonna stay low for long.’ That's the message the Fed wants markets to hear," El-Erian told Yahoo Finance’s On The Move Thursday afternoon.
The Fed stunning reversal to lowering interest rates last year, in tandem with its end-of-year return to balance sheet expansion and injection of hundreds of billions of dollars in liquidity to the financial system, has supported markets even as political and geopolitical uncertainties flared. However, it’s also created a potentially dangerous expectation that the Fed will always be able to come to the rescue.
“I keep on cautioning, be careful that you cannot bet on liquidity long-term. Yes, the Fed did a dramatic 180 a year ago. Yes, the Fed led other central banks to also follow it in policy loosening. But you can’t repeat it over and over again. And meanwhile, the uncertainties are piling up. So if you’re a tactical investor, life is relatively easy. If you are a longer-term secular and structural investor, life is getting much more difficult. And the challenge for all of us is to navigate this growing tug of war between constructive short-term and to use Ben Bernanke’s phrase, an ‘unusually uncertain’ medium-term.”
12:20 p.m. ET: Ukraine plane likely downed by Iranian missile: reports
U.S. officials believe the Ukrainian aircraft that crashed near Tehran on Wednesday was shot down by an Iranian missile, according to recent reports from multiple outlets.
Newsweek and CBS each reported Thursday that U.S. officials think the plane was hit by an anti-aircraft missile system originating from Iran, likely by mistake. Each outlet cited unnamed officials as sources.
Shares of Boeing rose more than 2% amid the reports. A Boeing 737-800 plane was involved in the crash.
An earlier report from Iranian investigators suggested the plane had suffered from a technical issue, had tried to turn back toward its origin airport in Tehran and had caught fire before falling from the air. Ukrainian officials said they were exploring a number of possible reasons for the crash.
Speaking from the White House Thursday around noon, President Donald Trump said he had “his suspicions” about how the plane went down.
“It's a tragic thing ... someone could have made a mistake on the other side,” Trump said “It was flying in a pretty rough neighborhood.”
11:42 a.m. ET: Stocks hold near the highs of the day
Gains in the S&P 500, Dow and Nasdaq accelerated as the session continued, with stocks holding near the highs of the session.
Here were the main moves in markets, as of 11:42 a.m. ET:
S&P 500 (^GSPC): +0.6% or +19.59 points to 3,272.64
Dow (^DJI): +0.71% or +204.33 points to 28,949.42
Nasdaq (^IXIC): +0.85% or +77.26 points to 9,206.50
Crude oil (CL=F): -0.23% or -$0.14 to $59.47 a barrel
Gold (GC=F): -0.62% or -$9.70 to $1,550.50 per ounce
“Markets are brushing aside fears of a major escalation in US/Iranian conflict after President Trump's comments yesterday evening. For markets, everything really is awesome,” Kit Juckes, macro strategist for Societe Generale, wrote in a note. “With a dearth of major market-moving data releases today, there's barely a cloud on the horizon.”
9:33 a.m. ET: S&P 500, Dow, Nasdaq open at record highs
Each of the three major U.S. stock indices surged to a fresh record high around market open Thursday as geopolitical fears faded.
West Texas intermediate crude oil prices extended losses, and gold prices hovered around $1,550 an ounce. The dollar strengthened against the Japanese yen.
Here were the main moves in markets, as of 9:34 a.m. ET:
S&P 500 (^GSPC): +0.59% or +19.16 points to 3,272.21
Dow (^DJI): +0.59% or +170.13 points to 28,915.22
Nasdaq (^IXIC): +0.84% or +76.31 points to 9,205.13
Crude oil (CL=F): -0.52% or -$0.31 to 59.30 a barrel
Gold (GC=F): -0.46% or -$7.20 to $1,553.00 per ounce
9:26 a.m. ET: Employment indicators look strong ahead of December jobs report
The U.S. Labor Department is poised to release its report on the state of the labor market in December Friday at 8:30 a.m. ET. Ahead of the report, early indicators have pointed to a robust labor market to cap off 2019.
The ADP/Moody’s private employment report Wednesday showed private sector jobs rose by 202,000 in December, far exceeding consensus expectations for 160,000 and the prior month’s upwardly revised level of 124,000.
Initial jobless claims fell to a five-month low of 214,000, seasonally adjusted, for the week ended Jan. 4. This brought the less volatile four-week moving average for new unemployment claims down to 224,000, down nearly 10,000 from the prior week’s average. While that average has risen since the third quarter of 2019, it “continues to signal strength in the labor market,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics.
The employment component of the Institute for Supply Management’s December non-manufacturing survey held above the neutral level of 50 to indicate expansion. The employment index came in at 55.2 for the month, a decline of 0.3 percentage points from November but still above the 2019 average of 55.
The Conference Board’s December labor market differential, which subtracts the number of consumers saying jobs are “hard to get” from those saying jobs are “plentiful,” fell slightly from its 2019 high of 38.3 from August to settle at 33.9 in December, but remained well above the two-year average of 24.9.
Consensus economists expect the Labor Department’s official jobs report will reflect 160,000 new non-farm payrolls added in December, down from 266,000 additions in November fueled by a return to work by striking General Motors employees. The employment rate is expected to hold at a 50-year low of 3.5%.
8:30 a.m. ET: Jobless claims fall more than expected to end 2019
Initial unemployment claims declined by 9,000 to a seasonally adjusted 214,000 for the week ended Jan. 4, the Labor Department said Thursday. This marked the fourth straight weekly drop in new jobless claims, or the longest streak since April.
This was below expectations for a decline to 220,000, according to Bloomberg consensus data. The prior week’s new jobless claims were revised up by 1,000 to 223,000.
Continuing unemployment claims, however, unexpectedly jumped to a seasonally adjusted 1.803 million for the week ended Dec. 28, versus expectations for 1.719 million.
7:30 a.m. ET: Stock futures extend gains as U.S.-Iran fears wane
Gold prices further pared last week’s gains, dropping below $1,550 per ounce. West Texas intermediate and Brent crude oil prices were little changed.
Adding to the relief rally were comments from China confirming that Vice Premier Liu He would travel to the U.S. from Jan. 13 to 15 to sign a previously announced phase one trade deal with the Trump administration.
Here were the main moves during the pre-market session, as of 7:30 a.m. ET:
S&P futures (ES=F): 3,272.25, up 12 points or 0.37%
Dow futures (YM=F): 28,880, up 110 points or 0.38%
Nasdaq futures (NQ=F): 8,990.75, up 46.25 points or 0.52%
Crude oil (CL=F): $59.73 per barrel, up $0.12 or 0.2%
Gold (GC=F): $1,547.70 per ounce, down $12.50 or 0.8%