Investors were also watching the central bank’s intervention in money markets on Wednesday to resolve unexpected liquidity issues. Major stock indices pulled back from their worst levels on the day after Powell said “It is certainly possible that we’ll need to resume the organic growth of the balance sheet sooner than we thought,” in response to the liquidity shortage.
Though Powell stressed that balance sheet expansion would not be a resumption of quantitative easing, or Fed purchases of debt securities in an effort to reduce long-term interest rates, equities moved higher nonetheless. “It’s still considered accommodative as it can serve to put more dollars in circulation,” Cruz said, explaining the move.
The New York Fed held a second repurchasing auction early Wednesday, injecting another $75 billion by temporarily buying securities from Wall Street dealers. The Fed on Tuesday carried out its first overnight repurchase auction in a decade to bring the benchmark federal-funds rate, which jumped to a high around 9%, back into a desired 2%-2.25% range by purchasing repos worth $53 billion.
Markets are also watching Middle East developments after Saudi Arabia’s oil-processing hub was attacked over the weekend by reported drone and missile attacks.
On Wednesday, Saudi Arabia’s Defense Ministry exhibited debris from the recent attack on its facilities, saying they are evidence that Iran was “unquestionably” behind the strike, adding the attack did not originate from Yemen to the south but from the north and Iran. President Trump has said he does not want war with Iran though U.S. Secretary of State Pompeo is heading to Saudi Arabia and Trump on Wednesday called for more sanctions on Iran.
Saudi Arabia will soon restore most of its oil output and return to normal production levels in weeks, the country’s energy ministry said Tuesday , following the attacks last weekend on the country’s facilities that hobbled the world’s largest oil exporter.
The attack initially caused the Brent price , the international benchmark, to rise 15% on Monday, the biggest single-session rise on record dating back to 1988, but U.S. benchmark crude, West Texas Intermediate grade and Brent oil have been giving up much of their gains since then.
Which stocks were in focus?
Shares of FedEx Corp. /zigman2/quotes/203047719/composite FDX -1.72% tumbled 12.9% after the logistics group missed profit expectations and cut its outlook, citing “increasing trade tensions,” and global economic sluggishness. Competitor UPS /zigman2/quotes/201245396/composite UPS -0.63% also saw its stock fall as Trump’s trade war takes its toll on international traffic.
CDW Corp. ’s shares /zigman2/quotes/208546399/composite CDW -1.97% rose 5.8% on news the tech group will join the S&P 500 this month.
AT&T Inc .’s stock /zigman2/quotes/203165245/composite T +1.46% was in focus amid reports that bankers were pushing the telecom giant to unload its DirecTV unit. Shares fell 1.1% Wednesday.
Altice USA Inc . /zigman2/quotes/207426329/composite ATUS +1.24% shares rose 1.4% to a 2-year high Wednesday after the internet and phone services company’s CEO said he was “absolutely open” to the idea of being acquired.
Trade in McDermott International Inc . stock was halted late Wednesday morning due to pending news, announcing that it has engaged turnaround consulting firm AlixPartners LLP to help improve its financial performance. The stock fell 63.3%, the largest single-day decline in the stock since it went public in 1982.
How did other markets trade?
Gold prices rose $2.40, or 0.2%, to settle at $1,515.80 an ounce, while the U.S. dollar, as measured by the ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.15% , a gauge of the buck against a basket of leading rivals, rose 0.3%.
In Asia overnight, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -2.03% fell 0.1%. China’s CSI 300 Index /zigman2/quotes/210598128/delayed XX:000300 +0.61% gained 0.5% after a 1.7% drop on Tuesday, and Japan’s Nikkei 225 index /zigman2/quotes/210597971/delayed JP:NIK -3.08% fell 0.2%.
In Europe, the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -2.52% closed virtually unchanged.