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Fed disappoints market, Nasdaq takes the brunt

Powell did not offer new stimulus, disappointing the market: the Nasdaq closed with a fall of 1.25%. Will sales continue in the final stretch of the week?

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This article was originally published by Admiral Markets

The Federal Open Market Committee (FOMC, its acronym in English) of the Federal Reserve agreed yesterday to maintain interest rates as before, in a range between 0% and 0.25%. What’s new about this decision is that Fed Chairman Jerome Powell has pledged to keep interest rates low until inflation is close to “moderately exceeding” the 2% target, something that experts say might not occur until at least 2023.

Otherwise, the Fed did not offer new stimulus to the economy and limited itself to maintaining the purchase of Treasury bonds and securities backed by residential and commercial mortgages “at least at the current rate” guaranteeing lax financial conditions.

What disturbed the market most is that Powell expressed doubts about the economic recovery by pointing out that, although it has progressed faster than expected, “the way forward remains very uncertain.”

The results were that the US markets closed lower:

  • The Nasdaq took the worst hit, closing with a fall of 1.25%
  • Apple fell -2.95%
  • Facebook dropped -3.27%
  • The S&P500 fell 0.46%

Only the Dow Jones managed to rise, slightly (0.13%).

M30 Nasdaq Chart

Source: Admiral Markets MetaTrader 5. M30 Nasdaq Chart. Data range: from September 14, 2020, to September 16, 2020. Prepared on September 17, 2020, at 7:20 am. Keep in mind that past returns do not guarantee future returns.

As we see in the 30-minute chart, the Nasdaq fell after news of the Fed’s decision came out and the losses were accentuated after Powell’s appearance. However, and despite the latest falls, the Nasdaq has appreciated more than 28% so far in 2020. In the last five years, the technology index only closed 2018 in the negative (-1.04%).

US 10-year Treasuries rose slightly yesterday to 0.685%, while the US dollar gained against most other currencies. The euro fell 0.4% to $1.1767 and the Chinese yuan 0.35% to 6.7686 yuan per dollar.

Yesterday was the last scheduled FED meeting before the presidential elections on November 3.

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  1. Log into your existing trading account or open a real or demo trading account in just a few minutes.
  2. In the Market Watch box look for the Nasdaq100 symbol.
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INFORMATION ON ANALYTICAL MATERIALS:

The data provided provides additional information on all analyzes, estimates, forecasts, forecasts, market reviews, weekly outlooks or other evaluations or similar information (hereinafter “Analysis”) published on the Admiral Markets website. Before making any investment decisions, pay close attention to the following:

1. This is a marketing communication. The content is posted for informational purposes only and should not be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and is not subject to any prohibition on pre-dissemination of investment research.

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3. In order to protect the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for the prevention and management of conflicts of interest.

4. The analysis is prepared by an independent analyst, Carolina Caro, SEO implementer (hereinafter “Author”) based on personal estimates.

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