US stocks hover around record highs as investors await Fed minutes

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  • US stocks trade mixed Wednesday as investors await the minutes from the Fed’s March policy meeting.
  • Details will reveal how Fed authorities view the path to economic recovery and the potential for inflation.
  • The 10-year Treasury yield is holding steady at 1.67% after climbing above 1.7% last month.
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US stocks trade mixed Wednesday as investors anticipate the minutes from the Federal Reserve’s March policy meeting to be published at 2 p.m. ET. Details will reveal how central bank authorities view the path to economic recovery in the country as well as how they may handle inflation.

The US economy has rebounded faster than what most have expected due in large part to President Joe Biden’s landmark $1.9 trillion stimulus package paired with steady vaccine rollout throughout the country, which has helped the labor, manufacturing, and travel sectors recover. The President on Tuesday moved up the timeline for all American adults to be eligible for a COVID-19 vaccine to April 19 from May 1.

The 10-year Treasury yield has held steady at 1.67% after climbing to the highest levels in over a year in March.

“The fact that the bond yields barely changed last week despite a raft of strong economic numbers … indicates that market has already gone a long way to pricing in the economic rebound,” Kathy Jones, Charles Schwab chief fixed income strategist, said in a note. “Also, it is hard to see U.S. yields surge from here since they are so far above those in many other developed markets in both real and nominal terms. With the current wide yield spread, foreign investors should find U.S. yields attractive.”

Mike Owens, sales trader at Saxo Markets, also said the Fed minutes might give better insight on how members envision the economic recovery and when they expect to hike rates.

“If 5-year US Treasury yields break above 1%, they might provoke a squeeze that could send 10-year yields on a fast track to 2%,” he said.

US shares closed lower Tuesday, with the Dow Jones Industrial Average and S&P 500 retreating from record highs reached the previous session. New sell-offs linked to the Archegos Management Capital crisis added to unease in markets even after US data revealed the economic rebound is on track.

Here’s where US indexes stood after the 9:30 a.m. ET open on Wednesday:

  • S&P 500: 4,073.73, down 0.01%
  • Dow Jones industrial average: 33,414.55, down 0.05% (15.69 points)
  • Nasdaq composite: 13,676.38, down 0.15%

On Tuesday, The International Monetary Fund lifted its estimate for global gross domestic product growth this year to 6% from 5.5%. The improvement was largely tied to expectations for economic reopening and mass vaccination, especially in advanced economies.

Oil prices climbed on optimistic economic data.

West Texas Intermediate crude rose by 0.83%, to $59.82 per barrel. Brent crude, oil’s international benchmark, was also up 0.78% to $63.23 per barrel. Oil prices dropped earlier in the week the Organization of the Petroleum Exporting Countries, or OPEC, said that it will add about two million barrels of oil each day to the market from May to July, easing production cuts.

Goldman Sachs CEO David Solomon meanwhile told CNBC Tuesday that he expects a major transformation in how the US government regulates bitcoin and other digital assets. “I think there’ll be a big evolution as to how this evolves in the coming years,” the CEO said.

Bitcoin slipped 3.42% to $56,612.61 as the rally stalls. Last week, the cryptocurrency flirted with the $60,000-level.

The revenue of Coinbase soared more than 800% year-on-year in the first quarter of this year, the company revealed on Tuesday. But the cryptocurrency exchange said the market is still too volatile to provide solid financial forecasts. Coinbase is set to directly list on the Nasdaq exchange on April 14.

Gold rose to 0.44% to $1,736.13 per ounce.

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