Investor Whiplash: Markets Seek Direction As Investors Question the Fed’s Real Intent

U.S. stock markets began the first moments of Thursday trading in the red before powering higher then, quickly turned negative again.

The whiplash was a result of the Fed hinting on Wednesday that it might raise rates in late 2023, instead of 2024.

Investors are trying to decipher what that means. For now? Not much. The reality that 2023 is still a long ways away.

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But, at least it signals that the Fed isn’t TOTALLY asleep at the switch and investors will need to enforce some kind of valuation principles to their portfolios.

Indeed, the initial hesitancy among traders was reflected in markets immediately following the FOMC statement on Wednesday. That pullback showcases how addicted the markets are to easy-money from the Fed. Naturally, Fed Chief Jerome Powell (finally) acknowledged that the Fed does see inflationary pressures in the economy…and, understandably, the statement spooked investors.

The reality is, the market is too addicted to the Fed’s printing press and deep down investors know it.

NONETHELESS, let’s be very clear: the Fed says it will leave its policy in place until LATE 2023 — so that tells me is…it is still ‘GAME ON’ for the foreseeable future. And investors are recognizing that by bidding up stocks in early trading Thursday.

Equities

Equity indices were mixed by 10am ET.

  • S&P 500 : 4,221 (-0.03)%
  • Nasdaq: 14,078 (+0.28%)
  • DOW futures: 33,938 (-0.28%)

U.S. Dollar and Treasuries

Treasury yields declined and the dollar strengthened relative to a basket of other currencies.

  • U.S. Dollar Index (DXY): 91.68, +0.61%
  • 10-year Treasury yield: 1.559% (-0.020 pt)

Stocks To Watch

The Fed rally has hit stocks hard, and meme stocks were hit the hardest. Orphazyme, Torchlight Energy and AMC were among the most traded stocks today. All three posted losses in the premarket trading.

Bill Gates-backed biotech CureVac announced its vaccine was only effective 47% of the time, according to an internal study. The company’s shares fell by more than 40% in premarket trading.

However, there’s always good news in the market:

A biotech company Mediatech Pharma has announced a breakthrough in the bio-delivery of medicines. The company has demonstrated that its “Q-Sphera” technology has the potential to formulate proteins into injectable products. These “Q-Sphera” could then encapsulate drugs and release them over predictable, sustained periods, from weeks to months.

KULR Technology Group, a company specializing in lithium battery safety, announced that it received a special permit from the U.S. authorities for battery transport. The U.S. Department of Transportation authorized the use of KULR’s specially designed packaging for transportation of lithium cells and batteries aboard cargo aircraft.

  • MTP Midatech Pharma $3.24, +58.55%
  • KULR KULR Technology Group, $2.80 +22.19%
  • CVAC CureVac $48.85, -48.70%
  • ORPH Orphazyme A/S $17.58, +8.45%
  • TRCH Torchlight Energy, $5.19,  -13.33%
  • AMC AMC Entertainment $53.70, -2.69%

Commodities To Watch

WTI Oil inched higher, as Brent crude fell slightly. Gold dropped below $1,800.

  • WTI crude: $72.21 +0.08%
  • Brent crude: $74.26, -0.17%
  • Gold: $1,789.30, -3.84%

Crypto

The global crypto market cap increased by 0.51% in the last 24 hours. Bitcoin was barely unchanged in the same period.

  • BTC: $39,812
  • ETH: $2,387
  • DOGE: $0.307886
  • THETA: $9.32
  • SHIB: $0.000006327
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