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Market Recap: Wednesday, April 7

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Stocks traded little changed Wednesday as investors considered the latest batch of stronger-than-expected economic data and digested meeting minutes from the Federal Reserve. Each of the three major indexes hugged the flat line, with the S&P 500 and Dow hovering near record levels. Invesco Chief Fixed Income Strategist Rob Waldner and Bankrate.com Senior Economic Analyst Mark Hamrick joined Yahoo Finance Live to discuss.

Video Transcript

BRIAN CHEUNG: The final minutes of the trading day, it seems like all three major indexes are hovering above and below where they were trading at the close yesterday. So, as we await the final trading bell, we've got a full panel of guests here. We have Rob Waldner, Invesco chief fixed income strategist, alongside Mark Hamrick, bankrate.com senior economic analyst. But before we go to them, let's take a look at the action in the last two minutes of trading with Yahoo Finance's Jared Blikre. Jared, what are you watching as we head into the close?

JARED BLIKRE: I am watching a bunch of chop, and let's just look at the charts for the day. Here's the Dow, down one basis point. You can see, not a lot of price action there. S&P 500 slightly in the green, pretty similar story. And finally, the NASDAQ, boy, these charts look alike, except for the Russell 2000. Russell 2000 suffering a little bit of a loss here, down 1.7%.

Well, the mega caps really the focus today. Nice turnaround because a lot of these guys were red on the open. Alphabet, Facebook, Microsoft, another sweep of record highs for them. Apple up at 1% and Nvidia up nearly 2%. But not feeling the love is Tesla. That's down about 3%. We're going to check out the EV space. Got some negative news from Nikola. Key executive there departing. We can see that stock is down 7% as well.

And then taking a look at the sector action today, we got communication services and tech, those are in the lead, housing those big FAANG mega cap names, followed by financial and energy. So it's a really nice mix of value and growth names here. And checking out the travel space once more, still seeing those airlines underwater. But some positive news on the cruise line front, sees Carnival, Royal, and Norwegian all in the green.

Now also going to check in on banks because we have seen those largely in the green today. JP Morgan up 1 and 1/2%, Bank of America up nearly 1%, Goldman Sachs slightly down. But did get those comments from JP-- Jamie Dimon that we were just talking about with our editor-in-chief. And here, here is the closing bell on Wall Street.

[BELL RINGING]

SEANA SMITH: That marks the close here of the trading day today. Again, taking a look at where the major averages ended the day. We're seeing a bit of a mixed picture, the Dow flipping back into positive territory, although just slightly closing up 15 points. The S&P up just around a tenth of a percent. The NASDAQ, the only major average here in the red out of these three, closing off just around 10 points. The mega caps, that was one of the big turnarounds here in today's market action, which Jared was just talking about. Apple, Google, Microsoft, Amazon, Nvidia among the names closing in the green today.

Let's bring in our panel. We have Rob Waldner. We also have Mark Hamrick closely watching today's action. Mark, we got the Fed minutes out earlier this afternoon, really reiterating the fact that the Fed's current policy is going to stick with what the plan is and what we've known it's been for at least the foreseeable future. We've had some stronger than expected economic reports over the last several trading days. How are you looking at the economic recovery? And are you revising your forecast at all?

MARK HAMRICK: Well, the good news is I don't have to issue a forecast. But in terms of my outlook, I think the outlook is only improving as each day goes on, as we get better news on the vaccines, the delivery of those vaccines into arms, and then the economic data that suggests there is a benefit to opening the economy and having people become safe from the virus. And with respect to the Fed minutes, you know, I think that the outlook continues to be one that's very upbeat.

But the Fed is more interested in outcomes. And so, it wants to see how the economy actually materializes when we get to that level of a full employment that it's looking for and may indeed try to get below the 3 and 1/2 level of unemployment that we enjoyed a year ago last February. So I think the outlook is quite bright. And that's something we're celebrating after the year or so that we've experienced.

BRIAN CHEUNG: Now I want to bring in Rob, just to ask about the other big news that came out today. That was from Janet Yellen and President Joe Biden kind of pushing ahead their infrastructure plan, again over $2 trillion. It seems like we got a little bit more granularity on the plan to fund that by maybe raising the minimum global corporate tax rate to 21%, in addition to pulling back some US subsidies on, for example, the fossil fuel industry. I guess I'm wondering, Rob, how you're viewing the movement on the infrastructure bill and whether or not markets have priced that in.

ROB WALDNER: Well, I think that one of the key pieces of news we've gotten recently, Brian, about this infrastructure bill is they're going to pay for a majority of it. Or at least, you know, we'll see how it turns out. But there's plans to pay for a lot of it. So from a growth perspective, it's not going to be the pylon that we originally thought we would get on top of the last fiscal bill, which was very large and not paid for.

So, very large fiscal stimulus to the economy. So we have to see how this fiscal-- how this infrastructure plan comes together. I think exactly what the taxes will look like is subject to negotiation. But, you know, I think from an economic perspective, it means we're not going to have quite as much push, if you like, than we may have expected a couple of months ago.

SEANA SMITH: Rob, how about the inflationary pressures and the impact that this could have here going forward? I know a lot needs to be hammered out in the details, but what are your expectations for that, at least right now?

ROB WALDNER: So we have a very interesting situation with inflation. I think investors need to be very careful how they think about inflation. Because inflation is going to go up quite a bit over the next couple of months just due to base effects. We had a big drop-off last year when the pandemic shut down. And you're going to get a big rise in inflation over the next several months. You know, we think it could get above 2 and 1/2-- heck, I could get to sort of 3%.

But that's likely going to be transitory. And I think the Fed is telling us it's going to be transitory. They're expecting it to be transitory. So they're not going to react to it. So if they don't react to it and it is indeed a story like we think it's going to be, you know, you'll get some market's concern for the next couple of months. But you shouldn't think that it's part of a longer term inflationary pickup.

BRIAN CHEUNG: And I want to direct a question towards Mark. I mean, I know you and I have been in the trenches over at the Fed before. And I'm wondering, do you feel different about the way that the Fed is kind of positioning itself within where we are right now? Because it seems like, broadly speaking, the news headlines have switched over to more of what's going on in the fiscal policy side of things as the Biden administration worked through that $1.9 trillion in stimulus and now tries to get this infrastructure bill ahead. Do you think the Fed is kind of on the background here, and no one's really watching them? Or is the risk of a communication mistake that gets picked up actually more elevated now?

MARK HAMRICK: Yeah, I feel like, first of all, I look forward to returning to those actual trenches. But I feel like Jerome Powell may feel as if a lot of the pressure is finally off of the FOMC or the Federal Reserve Board, simply because the fiscal heavy lifting legislation that has been passed by Congress and signed by presidents now has indeed been put into place. But I do think it's going to be an interesting conversation. And in a way, we're having it right now. And that is, what do we do after the impacts of the short-term stimulus begin to wane? If you look at that FOMC outlook, you're talking about GDP at 3.3% next year, 2.2% the year after that after 6.5% this year, which would be the best since 1984.

Now that's a good problem to have, much the same as we're talking about the risk of rising prices, as opposed to an economy that is left for dead. But it's an appropriate conversation for the Biden administration to have. What do we do to boost the long-term growth prospects for the US economy? And then, of course, as always, the devil truly is in the details.

SEANA SMITH: Hey, Rob, talking about the speed of the reopening and what we've seen so far, the TSA numbers that we've seen over the first few months, I guess, of this month, of the month of April, they were over 1 and 1/2 million, still substantially lower than where we were before the pandemic hit. But certainly, a massive improvement. How much of this, do you think, is priced in just in terms of what the market was expecting to see?

ROB WALDNER: I think we're starting to get it priced in. You know, you referenced some of the strong data that we've seen recently. So we had-- we added a million jobs last month. The ISM both services and manufacturing surveys either set all-time records or 30-year records. And when you look at what that means, that means that a tremendous amount of businesses are seeing a real pickup in their growth. And so, you know, I think there has been quite a lot of skepticism in the market over the last six months about the vaccine efficacy, how will we get it out.

There was a lot of bad news about getting the vaccine out. Now that we're going to get the vaccine into arms, you know, that's extremely good for the reopening. We think we'll get over 7% growth this year. But I would caution that, you know, we want to be careful about what the market actually, you know, is now pricing in because I think the market is starting to price some of that in. And to the previous comment, we need to think about 2022 and what that's going to look like.

BRIAN CHEUNG: And then, Mark, I want to ask. I mean, it seemed like the most important metric that people were paying attention to was inflation. But with those compositional effects-- we talked about that earlier-- the Fed's really trying to kind of push that down and tell people not to pay too much attention to numbers above 2% core PCE. So what is the most important metric that you're watching? Is it just the amount of jabs going into arms? Or is it some other inflationary expectation measure? What do you think is the most important?

MARK HAMRICK: You know, it's a little like being the parent of multiple children. You hate to have to pick one. But I mean, my long-term favorite is the monthly employment report and looking at payrolls numbers. That's going to continue to be vitally important. Tomorrow morning, obviously, we have weekly jobless claims. Well, as you-- [INAUDIBLE] as of the last read, we still had 18 million individuals still on some form of unemployment assistance.

All those numbers are important as is inflation. But the one that may knock the socks off of people this year to the point from the previous comment is annual growth. And if we get anywhere near what people are looking for, that's going to be something to celebrate. And it looks like people are going to be celebrating that.

BRIAN CHEUNG: All right, well, fantastic discussion right there. Rob Waldner, Invesco Chief Fixed Income Strategist, in addition to Mark Hamrick over at bankrate.com, thanks so much for joining us right there. Well, let's toss it over to Jared for some final thoughts on today's market action now that everything has kind of settled. Jared, what is catching your eye in terms of the final closing prices?

JARED BLIKRE: Yeah, I'm looking at the Chinese stocks and their performance. Their poor performance today, and in fact, a lot of these names have been doing poorly for quite some time. And I'm going to put this on a year to date. Actually, I'm going to do a trailing one month so you can see some of the damage that's been done. Baidu down 15%. It looks like some of the other names down 20% or more.

Now, why is this? Well, we have some frosting of the relations between the US and China in terms of the Winter Olympics. We also have the central bank over there and authorities trying to rein in liquidity. So this is something I'm definitely going to be keeping my eye on. And this other header, this other story just crossed my radar-- Twitter. A couple of stories about Twitter and Clubhouse. Now apparently, they discussed a $4 billion takeover.

However, according to the report, the talks are no longer active between Twitter and Clubhouse. And clubhouse is seeking to raise funding at a similar valuation. But they've got some competition because check out this other story that had just dropped an hour ago. Facebook has its own product called Hot Line. It's a Q&A product that's a mash-up of Clubhouse and Instagram Live. Well, that's going to be another competitor. So we'll have to see how all this plays out. But lots of interesting stories here after the close.