Markets close disparate after Biden announcement

The New York Stock Exchange’s S&P 500 Index ended lower on Monday after President Joe Biden chose Federal Reserve (Fed) chief Jerome Powell to head the central bank for a second term, but Wall Street lenders rose on the prospect of interest rate hikes in 2022.

The NASDAQ Composite also ended up in negative territory after, along with the S&P 500, previously hitting all-time highs.

Powell’s appointment was very well received by investors who hoped there would be no big changes at the Fed, as it steers the economy out of the pandemic. The central bank plans to return to its pre-virus monetary policy until the end of 2022.

Fed Governor Lael Brainard, who was the other candidate for the job, will be the vice president, the White House reported.

“Markets like predictability … Even if Brainard would have been a good choice, markets would not know what to expect from it even though the general consensus was that it would mean lower rates for longer,” said Randy Frederick, Principal Operations and Derivatives Manager at Charles Schwab.

The S&P 500 Bank Index rebounded as investors forecast a tightening of monetary policy in the first half of 2022. Wells Fargo & Co was among the best performers with a 3.11% increase in its shares.

The S&P 500 lost 0.32%, to 4,682.94 units, while the NASDAQ Composite was down 1.26%, to 15,854.76 points. The Dow Jones Industrial Average rose 0.05% to 35,619.25 integers.

BMV and Biva close with falls

The Mexican Stock Exchange (BMV) ended this Monday with losses and fell for the sixth consecutive day.

The local stock market fell in a session in which US President Joe Biden nominated Jerome Powell for a second term at the head of the Fed.

The main index of the BMV, the S & P / BMV IPC, composed of the shares of the 35 issuers with the highest value by capitalization and liquidity in Mexico, ended with a loss of 0.62% to 50,497.08 units.

For its part, the FTSE BIVA index, of the Institutional Stock Exchange (Biva), fell 0.75% to 1,040.34 units.

In six consecutive days with losses, from a level of 51,707.01 units on November 11, the main index of the local stock market has lost 2.34 percent.

Some analysts mentioned that the markets reacted to Biden’s decision, as keeping Powell at the head of the central bank would maintain the possibility of seeing an increasingly rapid cut in support for the economy. In addition, it raises the stakes on upcoming increases in the price of money. (With information from José Antonio Rivera)



Reference-www.eleconomista.com.mx

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