In this Nov. 16, 2020 file photo a man wearing a mask passes the New York Stock Exchange in New York. Stocks are wavering in early trading on Wall Street, holding the market near record highs it set earlier in the week. The S&P 500 edged up 0.1% early Wednesday, April 7, 2021, and the Dow Jones Industrial Average climbed 0.2%. (AP Photo/Mark Lennihan, File)
Stocks wobbled between small gains and losses in afternoon trading on Wall Street Wednesday, hovering around their record highs as investors remain cautiously optimistic about the economic recovery.
Vaccine distribution has been ramping up and President Joe Biden has bumped up his deadline for states to make doses available to all adults by April 19. The vaccines are helping to fuel a recovery, but the virus is still very much a threat as variants are discovered and threaten additional lockdowns.
The S&P 500 was up 0.1% as of 3:22 p.m. Eastern. Technology, communication and financial companies were helping to lift the market. Those gains were kept in check by a pullback in industrials, materials and health care stocks. The Dow Jones Industrial Average was little changed, and the Nasdaq was flat after having been down 0.3% in the early going.
The yield on the 10-year Treasury inched up to 1.66% after moving up and down for much of the day. A sharp increase in bond yields since the beginning of the year reflects a growing concern among investors that inflation could return as economic growth heats up and the U.S. pulls out of its pandemic-induced recession. Higher yields can slow down the economy by making it more expensive for people and businesses to borrow money.
The stock indexes were little changed following the release of minutes from the Federal Reserve’s latest meeting on interest rate policy.
The minutes revealed that Fed officials were encouraged last month by evidence the U.S. economy was picking up, but they showed no sign of moving closer to ending their bond purchases or lifting their benchmark short-term interest rate from nearly zero.
Fed policymakers also said they expect inflation will likely rise in the next few months because of supply bottlenecks, but they believe it will remain near their 2% target over the longer run.
“Nothing was all that surprising from the minutes," said Stephanie Roth, senior markets economist at J.P. Morgan Private Bank. "The Fed is watching closely, not just the unemployment rate, but they’re really focusing on bringing back the population that has fallen out of the labor force.”
The minutes are from a Fed meeting that came before last week’s March jobs report, which showed a surprisingly strong 916,000 positions were added that month, the most since August, and the unemployment rate fell to 6% from 6.2%.
The broader market has been mostly subdued since the S&P 500 reached another record high on Monday. Stocks within the index are just about evenly split between gainers and losers.
Analysts expect the recovery to continue, but they also expect the market remain choppy as investors shift money to companies and industries that stand to benefit as the pandemic eases.
Carnival, which essentially shut down during the pandemic, rose 1.3%. The company said bookings have picked up. Other cruise line operators also gained ground as they plan to restart operations. 7 Hotel Stocks Just Waiting For the Vaccine
Like any group of stocks related to travel and tourism, hotel stocks saw a steep drop in share prices in 2020. The leisure and hospitality sector that once had 15 million employees has lost 4 million jobs since February.
Many major cities will be feeling the ripple effects of the Covid-19 pandemic for years. However, there is ample evidence that shows the pandemic may be coming to an end. The number of new cases is dropping. The number of those getting vaccinated is rising. And even in the cities with the most restrictive mitigation measures, the slow process of reopening is beginning.
All of this can’t come fast enough for individuals who rely on the travel and tourism industry for their livelihood. Hotel chains had at least some revenue coming in the door. And when earnings season concludes, the more budget-friendly hotel chains may realize revenue that is 75% of its 2019 numbers. But that is not enough to bring the hotels to anywhere near full employment. Particularly with hotels that have bars and restaurants that have remained closed or open at limited capacity.
Many economists are optimistic that travel may begin to look more normal by the summer of this year. And the global economy may deliver 6.4% GDP growth this year. With that in mind, the hotel chains with the best fundamentals and the broadest footprint will be in the best position as the economy reopens.
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