The S&P 500 Index hits a record high, Biden insists Powell leads the Fed after the Dow rose 200 points

After President Joe Biden chose Jerome Powell to continue to lead the Fed instead of Fed Governor Lyle Brainard, the stock market rose on Monday. This move eased investors’ concerns about changing the governor of the central bank, while the country’s economy is trying to get rid of the Covid pandemic and struggle with inflation levels not seen in 30 years.

The Dow Jones Industrial Average rose 210 points. The Standard & Poor’s 500 Index rose 0.2% and hit a record intraday high, but fell back in midday trading. The Nasdaq Composite Index fell 0.8% after hitting a record high early in the session.

Powell, a former private equity executive, cut interest rates to near zero and implemented emergency asset purchases in March 2020 to help support the market during the first wave of the Covid-19 pandemic and help the financial system amid a sharp economic slowdown Keep running economic activities. During the Covid crisis, he also led a landmark reassessment of the Fed’s inflation target framework.

“The market appears to be responding positively to the continuity signal. In this potentially tricky recovery phase, with high inflation and high stickiness, strong demand growth but cooling, and a gradual rebound in capital and labor supply, continuity will be the key,” Greg Dakko said the chief American economist at Oxford Economics.

Powell’s renomination was carried out when inflation exceeded expectations in recent months, which led the Fed to overturn its forecast that the price increase associated with the reopening of the economy would be “temporary”. Some critics say that the Fed has been tightening monetary policy for too long.

The central bank began to slow down the pace of asset purchases in November. This is the first time since 2020 to significantly reduce the emergency plan, and said it may speed up the process early next year.

After the White House announced the Fed’s decision, yields on bank stocks and Treasury bonds rose. JPMorgan Chase shares rose 2.7%, while Morgan Stanley shares rose more than 3%. Rising interest rates seem to weaken some technology stocks. When the yield is higher, the future earnings of these technology stocks are less attractive to investors.

Brainard is regarded as Powell’s main competitor, and is favored by progressives in Washington for her position on banking regulation and climate change issues. She was nominated for the position of Vice Chairman of the Central Bank, but did not serve as many expected. The highest supervisory position.

“The fact that Brainard was not nominated as the vice chairman of supervision may also be a driving factor for good market momentum, because there are concerns that Brainard will work harder to strengthen bank supervision,” Dakko said.

Powell is a Republican. He was nominated as a member of the Federal Reserve Board of Governors by President Barack Obama for the first time ten years ago and held the highest position under the leadership of President Donald Trump. His relationship with the Republican Party and his previous confirmation of the Fed’s highest position are seen by some as the reason for identifying him more easily than other candidates in the heavily divided Senate.

“I think this is a good 1-2 combination,” said Art Cashin, UBS’s director of field operations.Scream in the street“I think this is what they want, without interruption. I think the market response you see is that the market is satisfied that there is no interruption. “

elsewhere, Tesla In CEO Elon Musk said the electric car manufacturer’s Model S Plaid may be launched It will be launched in China in the spring of 2022.

Moderna After the US Food and Drug Administration approved the company’s booster for all American adults last week, the stock price continued to rise, rising 4.8% in early trading.

The downside is, Activision Blizzard It is reported that CEO Bobby Kotick (Bobby Kotick) said that if he can not repair the company’s culture, he will consider resigning, the company’s share price fell 2.1%. The news was released after reports that Kotick was aware of sexual misconduct within the organization. The Nasdaq Composite Index was hit by the decline of Netflix and Etsy.

The Covid news also weighed on market sentiment, as German Chancellor Angela Merkel (Angela Merkel) warned that the country is experiencing a viral surge.

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The Standard & Poor’s 500 Index rose 0.3% last week, thanks to a series of outstanding earnings reports from large retailers and strong US retail data. The Nasdaq Composite Index, which is dominated by technology stocks, rose 1.2% last week. However, the blue-chip Dow Jones Index fell 1.3% during this period.

Stock has a record Post earnings during Thanksgiving Week, This may lay the foundation for the year-end Santa Claus gathering.

CFRA chief investment strategist Sam Stovall said that since 1950, the last five trading days of November have traditionally been positive. At the same time, the strategist said that the probability of the market rising the day before Thanksgiving is two-thirds, and the probability of a rise one day after the holiday is 57%.

The US market will be closed on Thanksgiving on Thursday. The stock market closed early on Friday at 1pm Eastern Time.

— CNBC’s Patti Domm provided reporting.

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