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Shares rise after Biden appoints Powell as Federal Reserve chairman

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Shares gained on Monday at the start of a shortened holiday week, as traders considered the much-anticipated reappointment of Federal Reserve Chairman Jerome Powell as central bank chief.

The Dow added more than 250 points, or 0.8%, during morning trading. The S&P 500 and the Nasdaq each rose as well. Investors started the week on a positive note, with equity and bond markets closing entirely Thursday and early Friday for the Thanksgiving holiday.

President Joe Biden announced Monday he is appointing Federal Reserve Chairman Jerome Powell for a second term at the head of the central bank, ending weeks of speculation over who would be chosen for the job. Financial stocks surged following the announcement.

Biden had to select either Powell or the current Fed Governor Lael Brainard as chairman of the Fed. Following the appointment, Powell will appear before the Senate Banking Committee for approval and, if confirmed, serve another four-year term.

I think this was widely expected by the markets. Granted, there have been conversations in the markets over the past couple of weeks about Brainard potentially rising to Fed chairman. But overall, the expectation was one of consistency, Erin Browne, chief executive and portfolio manager of Pimco, told Yahoo Finance Live on Monday. You can see a small rally as a result of this with the hope that the policy will stay put and intact, and anything that has already been articulated by the Fed is likely to continue into 2022 and beyond.

Powell, who has led the central bank throughout the COVID-19 period, is said to be tasked with helping to further guide the Fed as it grapples with whether the economic recovery has progressed enough to warrant a further cut in the rate. support for monetary policy.

“The most important question right now is how far the Fed ultimately raises interest rates,” John McClain, portfolio manager for Brandywine Global’s high yield and corporate credit strategies, told Yahoo Finance Live on Friday. “Right now, expectations are about two and a half to three hikes in 2022, and will likely hit around 175 basis points on federal funds in the end.”

“The market and the media are focused on a faster Fed cut and rise before June next year,” he added. “And most importantly, we see inflation and the things that matter to the consumer, the prices at the pump, the food, the rent, everything goes up. And the list goes on and on.”

More data on the inflation front is expected to be released this week, which will further provide data on whether the Fed may need to step in as soon as possible to curb persistently high prices. The Bureau of Economic Analysis’s personal consumption expenditure index (PCE) released on Wednesday, which serves as the Fed’s preferred inflation indicator, is likely to show 4.1% from last year, based on Bloomberg consensus data. It would be the biggest annual jump in about three decades.

Optimism over new trading activity across many industries also helped push stocks higher on Monday. Constellation Brands (STZ), the maker of Corona beer, is reportedly exploring a deal to combine with support from Coca-Cola (KO) energy drink company Monster Beverage, according to a Monday Bloomberg Report. And private equity firm KKR & Co. made an offer of around $ 12 billion to bring Telecom Italia back to the private sector, sending the shares of the Italian telecommunications giant back up sharply.

Investors also shook nervousness from the end of last week, as the increase in COVID-19 cases around the world has triggered new concerns about the spread of the virus. Austrian the government has put in place a fourth national lockdown since the start of the pandemic, effective Monday and lasting at least 10 days, to try to stem jumping infections. Germany has considered a similar approach. The latest round of stay-in-place orders has raised concerns among investors that declining consumer mobility could ultimately put renewed pressure on economic activity at home and abroad.

“In the United States, COVID cases have declined but have remained above summer lows and have increased recently,” wrote Rubeela Farooqi, chief economist at High Frequency Economics, in a note Monday. “We don’t expect blockages in the US. Experience with the Delta variant suggests that mandatory blockages are not necessary to suppress activity. Wary of the health risks associated with the increased number of cases, people may voluntarily avoid high-contact activities. ”

10:17 am ET: Big Tech stocks rally as investors anticipate Fed tilt after Powell’s re-appointment; Apple and Microsoft set records

Big tech stocks surged Monday morning after Biden announced he was appointing Powell to remain chairman of the Federal Reserve for another four years.

The announcement was welcomed by investors in technology and growth stocks, who are seen as the beneficiaries of a more accommodative monetary policy and lower rates. Apples (AAPL) the stock, a heavily weighted component of major U.S. stock indexes, jumped 3% to an intraday record, and Microsoft (MSFT) rose almost 2% to its own record. Both stocks posted market caps well above $ 2.6 trillion following the gains.

10:06 am ET: Existing home sales unexpectedly surged in October to their highest level since January

Used Home Sales in the United States unexpectedly jumped to its highest level in nine months in October, signaling that housing demand was picking up amid relatively low mortgage rates and strengthening labor market conditions.

Existing home sales rose 0.8% month over month in October, reaching an annualized rate of 6.34 million, according to data from the National Association of Realtors. Consensus economists were looking for existing home sales to fall at an annualized rate of 6.2 million for October, from 6.29 million in September, based on Bloomberg consensus data.

Since the start of the year, sales of existing homes have increased 11% compared to the same period in 2020 and 13% compared to 2019, or before the pandemic. Existing home sales are on track to hit at least 6 million units this year, which would be the best sum in 15 years.

9:30 a.m. ET: Stocks surge after Biden reappoints Powell as Fed chairman

Here’s where the markets were trading right after the opening bell:

  • S&P 500 (^ GSPC): +21.2 (+ 0.45%) to 4,719.16

  • Dow (^ DJI): +131.53 (+ 0.37%) to 35,733.51

  • Nasdaq (^ IXIC): +72.50 (+ 0.49%) to 16,136.85

  • Raw (CL = F): $ -0.71 (-0.93%) to $ 75.23 per barrel

  • Gold (CG = F):-$ 31.40 (-1.70%) to $ 1,820.20 per ounce

  • 10-year cash flow (^ TNX): +5.7 bps for a yield of 1.593%

8:48 a.m. ET: Chicago Fed’s national activity index rebounds to higher than expected level in October

a Chicago Federal Reserve Economic Activity Tracking Index region jumped more than expected in October, with a surge in production in the Midwest helping to fuel results.

The Chicago Fed’s national activity index fell to 0.76 in October from September, beating estimates of 0.10, according to data compiled by Bloomberg. In September, the index stood at -0.18. Readings in positive territory indicate above average growth.

Production-related indicators made a positive contribution to the overall index after being subtracted from the overall figure in September. Industrial production rose 1.6% in October after falling 1.3% the month before. And employment-related indicators also accelerated, contributing 0.24 points to the index after contributing 0.16 points in September.

7:52 a.m. ET Monday: Stock futures rise

Here’s where the markets were trading on Monday morning:

  • S&P 500 Futures Contracts (ES = F): +13.75 points (+ 0.29%), at 4,708.25

  • Dow Futures (YM = F): +88 points (+ 0.25%), at 35,637.00

  • Nasdaq Futures (NQ = F): +64.75 points (+ 0.39%) to 16,639.75

  • Raw (CL = F): $ -0.13 (-0.17%) to $ 75.81 per barrel

  • Gold (CG = F): – $ 8.90 (-0.48%) to $ 1,842.70 per ounce

  • 10-year cash flow (^ TNX): +4.5 bps for a yield of 1.581%

A trader works on the trading floor of the New York Stock Exchange in New York, United States on September 20, 2021. US stocks fell on Monday as selling pressure intensified on Wall Street.  The Dow Jones Industrial Average lost 614.41 points, or 1.78%, to close at 33,970.47, after dropping more than 970 points at its session low.  The S&P 500 lost 75.26 points, or 1.70%, to 4,357.73.  The Nasdaq Composite Index lost 330.06 points, or 2.19%, to 14,713.90.  (Photo by Xinhua via Getty Images)

A trader works on the trading floor of the New York Stock Exchange in New York, United States on September 20, 2021. US stocks fell on Monday as selling pressure intensified on Wall Street. The Dow Jones Industrial Average lost 614.41 points, or 1.78%, to close at 33,970.47, after dropping more than 970 points at its session low. The S&P 500 lost 75.26 points, or 1.70%, to 4,357.73. The Nasdaq Composite Index lost 330.06 points, or 2.19%, to 14,713.90. (Photo by Xinhua via Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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