NEW YORK – Wall Street closes sharply, with the S&P 500 recording its largest decline since October. The Dow Jones lost 2.05% to 30,302.97 points, the Nasdaq lost 2.61% to 13,270.60 points while the S&P 500 dropped 2.60% at 3,750.94 points.
The lists are suffering from the statements of the Fed: the recovery – he said – in recent months has weakened. In its first meeting of the year and the first in the era of Joe Biden and Janet Yellen, the central bank leaves rates flat between 0 and 0.25%, pledging to continue its asset purchase plan and maintain policy. monetary easing up to substantial progress on the employment and inflation front.
The recovery trend, explains the Fed in the statement released at the end of the two-day meeting, “will depend significantly on the virus and vaccines”. A Covid that continues to weigh on economic activity, on the labor market, on inflation and which “poses risks to the economic outlook”. Faced with this picture, the central bank reiterates its “commitment to use the range of instruments at its disposal to support the recovery in this difficult time, promoting the objectives of maximum employment and price stability”.
Wall Street listens to the message but is declining in a session marked with a minus sign since the start of trading pending the quarterly reports of Apple, Tesla and Facebook. Investors’ attention is all on stocks like GameStop, the Texas video game company that has risen 700% since the start of the year and is the subject of a bitter battle between retail traders and hedge funds. A clash that ended up under the lens of Janet Yellen’s Treasury which is “monitoring”, says the White House. Fed chairman Jerome Powell does not comment on the GameStop case, limiting himself to specifying that the Fed “monitors financial conditions broadly and also carefully examines aspects of the non-banking sector.”
And so the Fed’s reassurances fall on deaf ears. What is striking is the official certification of a slowdown in growth and of an economic activity that remains “still below” pre-pandemic levels. “Millions of Americans are left out of work. And the way forward for the economy is uncertain, ”says Fed chairman Jerome Powell. “Inflation remains below 2%”, he adds, observing how despite everything the economy “has proved more resilient than expected”.
In any case, the «road is still long» to reach «our objectives of maximum employment and price stability. It will probably take some time to make substantial progress, ”highlights Powell, who is now having to work with the one he has replaced. Yellen before becoming the US prime minister of the Treasury was in fact the first woman to lead the Fed. Yellen was then removed by Donald Trump, who replaced her with Powell.
On the price front, the Fed chairman notes that weak demand and falling prices contribute to keeping inflation low. “Financial conditions remain accommodative, partly reflecting measures to support the economy,” adds the Fed. “The road to a full recovery is still long. At least nine million Americans are still out of work. In this context, it is up to Congress and the administration to decide “the amount of any aid to be allocated, explains Powell, responding to those who asked him how much public stimulus to the economy was still needed. Powell thus sends the ball back to politics and the new administration, which has proposed a $ 1.9 trillion plan to save the economy. A plan whose road to Congress appears uphill with a split Senate in which the balance is the vice president Kamala Harris.
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