US stocks get back on track

GameStop (GME) shares climbed rapidly and trading was halted twice for volatility ahead of the closing bell Wednesday. The gaming retailer’s stock was priced at $91.71 at market close, up nearly 104% from the previous day.

Trades were halted once around 3:40pm ET after climbing nearly 74%, and again just over 10 minutes later after reaching a 104% gain.

Déjà vu? The surge comes about a month after a wild GameStop trading frenzy caused the stock to jump around 1,600% in a matter of days, though it quickly fell from highs of around $350.

AMC (AMC), another “meme stock” involved in last month’s trading frenzy, also jumped roughly 20% on Wednesday.

US stocks found their footing again over the course of the session and rallied into the close. The Dow eked out its best gain in three weeks.

Rising bond yields have been weighing on the market recently, but Fed chair Jerome Powell once again reiterated in congressional testimony Wednesday that the economy needs more help to get back to its pre-pandemic strength. Stocks liked this message and climbed higher after initially opening in the red.

Elsewhere, notorious gaming retailer GameStop (GME) of Reddit and congressional hearing fame saw its shares halted multiple times Wednesday afternoon as the stock soared. The stock closed nearly 104% higher.

The Federal Reserve is suffering a disruption in multiple payment services due to an operational error, the central bank said in a statement Wednesday.

The Fed’s website indicates a service disruption for almost all of its payment services, and a spokesman confirmed this includes Fedwire.

Banks, businesses and government agencies rely on Fedwire to zip vast sums of money around the US banking system. More than $3 trillion was transferred daily on Fedwire during the fourth quarter.

“We are restoring services and are communicating with all Federal Reserve Financial Services customers about the status of operations,” the Fed said in the statement supplied to CNN Business.

Laysha Ward during the Texas Conference For Women 2019 at Austin Convention Center on October 24, 2019 in Austin, Texas.

United Airlines has added Laysha Ward, a Black female executive from Target, to its board of directors.

Ward, Target’s chief external engagement officer, has been with the retailer for 30 years. She previously served as the retailer’s director of community relations and chief corporate social responsibility officer . She joins two other women on what is now United’s 14-member board: Carolyn Corvi, who is White, a 34-year Boeing veteran who retired as the company’s vice president and general manager of its airplane program; and Michele Hooper, who is Black, CEO of The Directors’ Council, which consults with corporate boards to increase their independence, effectiveness and diversity.

None of the 11 male members of the United board are African American, although two are Hispanic - former CEO Oscar Munoz, who still serves as executive chairman, and Sito Pantoja, the representative of the International Association of Machinists union on the board.

Charlie Munger, the 97-year old vice chairman of Berkshire Hathaway (BRK.B), is (unsurprisingly) not a fan of meme stocks like GameStop (GME) or trendy blank check special purpose acquisition companies.

“I think it must end badly but I don’t know when,” Munger said at the annual shareholder meeting for Daily Journal (DJCO), the Los-Angeles based newspaper publisher where he is chairman. (The meeting was webcast on Yahoo Finance, just as Berkshire’s will be in May.)

Munger warned that it is dangerous for investors to keep buying stocks in a “frenzy” just because prices are going up. He compared the GameStop surge to horse racing. And he said the popularity of SPACs were an “irritating bubble” and that “the world would be better off without them.” 

Like Buffett, Munger is not known for mincing words, but he did have some nice things to say. Munger argued that “value investing will never go out of style” and that Amazon (AMZN) CEO Jeff Bezos, who recently announced plans to step aside from that post, is one of the smartest businessmen ever.

Berkshire owns a stake in Amazon and the company partnered with the tech/retail giant on its since shuttered Haven health care venture.

Weekly initial jobless claims have been stubbornly high for months. We’re nearing the anniversary of the pandemic and are still looking down the barrel of claims some four times higher than before the viral outbreak.

Economists predict another 838,000 first-time claims for jobless benefits in tomorrow’s report from the Department of Labor. That would be a decrease from the prior week’s 861,000 but still nowhere near where we’d like to be.

Continued claims, which count applications filed for at least two weeks in a row, are expected at 4.5 million, flat from the prior week.

These numbers don’t yet include benefit claims filed under the government’s various pandemic-specific programs.

But there’s more high profile data on the docket for tomorrow: we’ll also get the second reading of fourth quarter gross domestic product, the broadest measure of economic activity.

Economists predict a slight improvement to an annualized growth rate to 4.2% versus the first reading that we got in January that showed a 4% rate.

Even though the Federal Reserve has long said that it isn’t planning to raise rates any time soon, investors are spooked. Higher interest rates would weigh on stocks because it would make it more expensive for companies to borrow money.

So is everyone concerned about a sudden spike in inflation that might force the Fed’s hand to hike rates out of nowhere? Not so much.

“What the Fed ultimately wants, the Fed will get,” said Brad Neuman, director of market strategy at Alger.

According to Neuman, the Fed wants inflation to go higher – which makes sense given that consumer prices only rose 1.4% in 2020, far below the Fed’s long-run target of 2%. But the central bank might not actually want higher real rates.

“I think you look at a prolonged period of time before real rates spike,” Neuman told Alison Kosik on the CNN Business’ digital live show Markets Now.

Anxiety levels have soared during the pandemic, making meditation apps ever more popular.

The valuation of Calm is valued at $2 billion at this point and its co-founder and co-CEO Michael Acton Smith thinks the company could be valued at as much as $100 million or more. The business is also likely to do an IPO eventually, Acton Smith told Alison Kosik on the CNN Business digital live show Markets Now.

Calm, as well as its competitors, use celebrities to take meditation mainstream.

“One of the biggest upticks was in the summer when Harry Styles launched a sleep story,” Acton Smith said.

And more celebrity collaborations are coming, he added.

Bond yields are off the day’s highs and stocks are back in the green. But worries about a potential spike in inflation when the economy fully reopens, which could force the Federal Reserve’s hand with respect to interest rates, continue among investors.

But Moody’s chief economist Mark Zandi isn’t concerned about that.

“I don’t think inflation is an issue, certainly not at this point,” he said on the CNN Business digital live show Markets Now.

“Chairman Powell made a good point, over the past years the problem hasn’t been high inflation, it has been low inflation,” Zandi said with respect to Federal Reserve Chairman Jerome Powell’s testimony on Capitol Hill this week.

Given that, it’s hard to imagine suddenly having a high inflation problem.

We also have a long way to get back to anything that might be considered full employment, Zandi added, which means more help from Washington is needed. Unemployment remains high, and the national average doesn’t reflect the number of people who have left the workforce altogether.

President Joe Biden’s $1.9 trillion package is currently being debated in Washington. “If I were king for a day, I think i would use that money a little differently than what’s in the American Rescue Plan,” Zandi said. He added that “this thing needs to get passed fast, and with that in the backdrop I’m willing to cut some corners to get this thing done.”

It’s a repeat of yesterday: Powell’s not-exactly-new message that more needs to be done to get the economy back to its previous strength, and his reiteration that the Fed is seeing a long-run spike in inflation, has knocked Treasury yields off their highs and allowed stocks to climb.

Just after midday, the Dow is up 1%, or 320 points, while the broader S&P 500 is up 0.9%.

The Nasdaq Composite is up 0.7%.

The 10-year US Treasury yield sits at 1.37%.

The primary trade association for the US retail industry is predicting a bumper 2021 as the economy rebounds from the pandemic and more people get vaccinated.

The National Retail Federation said Wednesday that it forecasts retail sales to grow between 6.5% and 8.2% to more than $4.3 trillion this year. Last year, sales grew 6.7%, NRF said.  

The group expects online spending to drive retail sales: Online sales will rise up to 23% this year, the group predicts.

“We are very optimistic,” NRF CEO Matthew Shay said in a news release. “Healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending,”

Millions of Americans remain unemployed as a result of the pandemic, and many will be able to return to work when the economy fully reopens— but some will be left behind.

“Not all those jobs are going to come back,” Federal Reserve Chairman Jerome Powell told the House Financial Services Committee.

Automation is one reason for that, Powell said. The use of technology that eliminates human jobs has been a long-run trend, but the pandemic has accelerated this process, he added.

“There’s going to be a need for training and replacement” to deal with this issue in the wake of the recovery, he told lawmakers.

2021 will be a big year for the possibility of a digital US dollar, Federal Reserve Chairman Jerome Powell told members of the House Financial Services Committee.

“This is going to be the year in which we engage with the public pretty actively,” Powell said.

Fed officials have previously discussed the potential for the central bank to create a digital currency. First it would need to address policy and technical questions, as well as solicit public feedback. The Fed is also collaborating and sharing work with other central banks in the world on the topic, Powell said.

“I think it makes sense for central banks to look at it and I’m aware the Fed is looking at it,” Treasury Secretary Janet Yellen said at New York Times DealBook DC Policy Project earlier this week.

Representative Patrick McHenry, the ranking member on the Financial Services Committee, said during the hearing that he thinks “the project is vital.”

Among many other considerations, the Fed would need to create a digital currency in a way that does not undermine the existing, functioning system in the United States, Powell said.

The House Financial Services Committee hearing is under way, and Federal Reserve Chairman Jerome Powell jumped right in to remind us that the US employment situation is actually worse than it seems.

“We have 10 million fewer people working on payroll” compared to February 2020, before the pandemic hit, Powell said.

The reported unemployment rate fell to 6.3% in January. But it actually counted those who have had to leave the workforce and whose jobs have been otherwise affected by the pandemic, “you get to an almost 10% unemployment rate,” Powell said.

“There’s a lot of slack in the labor market and we have a long way to go,” he added.

President Joe Biden wants to give low-wage workers a big raise – but the business community is urging Washington not to rush the first minimum wage hike since 2009.

In a letter to Congressional leaders, the Business Roundtable suggested for the first time that the minimum wage hike should be linked to progress in defeating the coronavirus pandemic.

“In the context of a major recession involving millions of small business job losses, this will require an appropriate phase-in and, potentially, triggers tied to the end of the pandemic,” Business Roundtable CEO Josh Bolten wrote in the Tuesday letter.

The Business Roundtable did not specify what those triggers would be.

Biden’s proposal to raise the minimum wage to $15 an hour, up from $7.25, has run into resistance by concerns it would hurt small businesses and cost jobs. 

The Business Roundtable reiterated support for a federal minimum wage hike but said it should be “thoughtfully designed to reflect regional differences in wage rates and not undermine small business recovery.”

The group also repeated that the minimum wage debate should be separate from Biden’s $1.9 trillion Covid relief package so not to delay efforts to end the pandemic and boost the economy.

TJX (TJX), the owner of TJMaxx and Marshalls, said Wednesday that sales dropped during the holiday stretch as fewer consumers picked up clothes.

Sales at TJMaxx and Marshalls stores in the United States open for at least a year dropped 7% during the thirteen weeks ending January 30 compared with the same stretch last year.

Sales took a steeper fall in Europe and Canada, where some stores were temporarily closed last quarter because of the pandemic. TJX estimated these closures this took nearly $1 billion off sales during the quarter.

One bright spot for the company: HomeGoods, where US sales increased 12% last quarter.

TJX’s stock fell around 3% during pre-market trading.

Despite the sluggish holiday period, some analysts say TJX remains in strong shape in the long run.

“TJMaxx and Marshalls are in a good position. Consumers remain very value conscious and, once the pandemic is over, many will be unwilling to spend large amounts on clothing,” Neil Saunders, analyst at GlobalData Retail, said in a note to clients Wednesday.

Stocks opened lower again Wednesday morning, marking the third-straight day they have kicked off in the red.

Rising Treasury yields are again the culprit, climbing to 1.43%, or more than 0.06%. Investors will keep a close eye on Federal Reserve Chairman Jerome Powell’s testimony before the House Financial Services Committee later this morning. On Tuesday, Powell’s testimony in the Senate managed to move yields back down and gave the Dow and the S&P 500 room to finish higher.

We’re nearing the one year since the 10-year Treasury bond yield dropped below 1% for the first time ever — and things could not look more different.

US government bond yields are again heading higher today, as they have over the past sessions.

The 10-year bond last yielded 1.41%, up nearly .05%. (Bond yields and prices move in opposite directions.)

The sudden frenzy in the bond market comes on the back of rising interest rate expectations: Investors believe that the full reopening of the economy will bump up inflation and force the Federal Reserve to hike up rates sooner than previously thought.

But yesterday, Fed Chairman Jerome Powell testified before the Senate Banking Committee and reiterated that the central bank isn’t concerned about a sustained spike in inflation, even if there might be short-time spikes later this year.

Bond yields reversed their climb following Powell’s testimony yesterday.

Will we see the same move today? Powell is due to testify before the House Financial Services Committee at 10 am ET.

The housing market is still red hot. But there are growing concerns about how much longer this strength can last.

Home Depot (HD) reported earnings and sales that topped Wall Street’s forecasts Tuesday. Lowe’s (LOW) also reported better-than-expected earnings and sales on Wednesday morning, and CEO Marvin Ellison said in a statement that sales were lifted thanks to “broad-based demand driven by the continued consumer focus on the home.”

Still, rising interest rates could eventually be a problem for Home Depot and Lowe’s. Even though the Federal Reserve is expected to keep its key short-term rate near zero for the foreseeable future, longer-term bond yields have started to spike. And mortgage rates are influenced more by the 10-year Treasury than Fed rates.

In an ominous sign, Home Depot declined to give any guidance for 2021. Its shares fell 3% on the news.

Read more here.

US stock futures pointed toward a second straight day of gains. Investors remain concerned that rising bond yields are making risky stocks – particularly tech stocks – less attractive. Higher interest rates tied to bond yields could cut into companies’ profits. But testimony from Jerome Powell, which will continue Wednesday, boosted investors’ hope for a continuation of cheap money policies for the foreseeable future. 

Here’s where things stand as of 6:15 am ET:

Stocks close mixed on Tuesday after spending much of the session deep in the red. The S&P 500 managed to snap a five-day losing streak, its worst in a year.

Rising Treasury bond yields, which track interest rate expectations, have been weighing on stocks. But 10-year US Treasuries yields were slightly lower at 1.36% at the time of the closing bell, having pared their earlier gains.