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Fed expects economic gains to prompt gradual rate increases
24 February 2018, 09:28 | Gordon Grant
By Hilary Russ
Equity markets are wobbling as the outlook, according to experts, is for USA inflation to rise possibly a little faster than the Fed expects, which will likely see the central bank adjust and do some policy tightening.
Bond prices fell. The yield on the 10-year Treasury rose to 2.90 percent.
In its semiannual monetary policy report, the Fed signaled that it saw broad improvement in the USA economy and pointed to a pickup in inflation toward the end of past year, but didn't suggest that a rise in prices warranted more aggressive policy action (http://www.marketwatch.com/story/fed-on-track-for-3-rate-hikes-in-2018-but-4-no-sign-in-report-to-congress-2018-02-23).
The Dow Jones Industrial Average fell 254.63 points, or 1.01 per cent, to 24,964.75, the S&P 500 lost 15.96 points, or 0.58 per cent, to 2,716.26 and the Nasdaq Composite dropped 5.16 points, or 0.07 per cent, to 7,234.31.
It is still down more than 4% in February so far, however, after global equity markets were mauled at the start of the month by the concern that inflation is picking up.
USA stocks rose higher in early trade after a mixed finish on Thursday when the Dow Jones and S&P 500 closed up but the Nasdaq ended the day in the red.
The Fed's summary comes ahead of newly minted Fed Chairman Jerome Powell's testimony about the economy before Congress next week.
New auto allocation seen as key to survival of GM Korea The official, who had direct knowledge of the matter, said GM had asked South Korea to inject funds into GM Korea through KDB. South Korean workers threatened to go on a full strike if the U.S. automaker decides to pull out of the country completely.
Giants will receive compensatory fourth-round draft pick However, compensatory picks are also limited to the number of teams in the league, so only 32 are given out each year. Most expected the Packers to gain four extra picks after losing several top players in free agency last offseason.
"Right now Fed fund futures are pricing in three rate hikes with just under a 50-50 short of a fourth", said Matt Miskin, market strategist at John Hancock Investments. The Fed policy report appeared to echo that view.
The dip in yields helped boost bond proxy sectors such as utilities .SPLRCU , up 2.66 percent, and real estate .SPLRCR , up 1.72 percent.
By this he meant that raising interest rates does not have an immediate impact on the economy.
The dollar sagged broadly on Friday after its recovery this week faded as U.S. treasury yields declined from their recent peaks. However, if he fails to heed Milton Friedman's teaching that monetary policy operates with long and variable lags, we should brace ourselves for a prolonged period of very unsettled financial markets. "That would probably be positive for the dollar", Gittler said.
Blue Buffalo Pet Products Inc (NASDAQ:BUFF), saw its share lift 16.91% at US$39.89 after it agreed to be taken over by General Mills Inc (NYSE:GIS) for US$40 per share in cash, or a total of US$8bn.
Hewlett-Packard Enterprises Co.(HPE) shares jumped about 10% after the enterprise-focused tech group reporting a strong fiscal first quarter. It shed about 1.4 percent this week, its biggest weekly decline since early December. It also came before a very inflationary and stimulative budget deal in Congress that is expected to push the annual deficit past the $1 trillion threshold soon. The company's shares were down 0.5%.
Technology stocks, which led the early gains, ended lower.
Google's Reply app is here and works surprisingly well
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NRA backlash: These are the companies cutting ties
Wayne LaPierre said "opportunists" were using the 14 February tragedy to expand gun control and abolish United States gun rights. Activists say they want to know why these businesses won't cut ties with the NRA. "But the NRA, the NRA does care".
Kerala CM wishes Haasan well on launch of political party
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UK employment rises for the first time in almost two years
Other figures revealed that average earnings increased by 2.5 per cent in the year to December, unchanged from the previous month. There were 1.47 million unemployed Brits in the final quarter of 2017, an increase of 46,000 from July to September a year ago .
Venezuela launches its own cryptocurrency, the "Petro"
Furthermore, should President Maduro lose the election in April, "then petros would probably be made illegitimate", he added. Some investors say it's innovative nonetheless, and could draw investment from Middle East, Europe and Asia.