Stocks Tumble After Fed Warns More Stimulus Needed

European markets have opened in the red this morning as investor sentiment remains downbeat due to increased case numbers and central bank commentary weighing on equities. This comes after Federal Reserve officials argued that more fiscal stimulus from Congress will be needed to support the US economy through the Covid-19 downturn. Investors took a bleak view of the warning, which comes as Democrat and Republican lawmakers remain at odds on what the next round of stimulus should look like. Enhanced unemployment benefits and funding for state and local governments are two of the main points of contention between the parties. Fed chairman Jerome Powell argued that “the recovery will go faster if there is support coming both from Congress and the Fed,” on Wednesday, adding that “the power of fiscal policy is unequalled.” Energy stocks took the hardest hit in the S&P 500, with the sector plunging 4.6% on aggregate, while information technology names ended Wednesday 3.2% lower.

Western Digital offers a bright spot amid dismal day for markets

The Nasdaq Composite was the hardest hit of the three major US stock indices, ending the day 3% lower, dragged down by a 10.3% loss from Tesla (TSLA), and 4% plus drops from Apple (AAPL), Netflix (NFLX) and Amazon (AMZN). One name that stood out from the crowd in the Nasdaq yesterday was computer memory firm Western Digital (WDC), which jumped 6.7% after announcing that it plans to reorganise itself to create separate units for its flash memory and hard drive businesses.

In the S&P 500, oil exploration firms were among the hardest hit stocks; Apache (APA), Marathon Petroleum (MPC) and Occidental Petroleum (OXY) all fell between 6% and 9%. The biggest loser in the index was lithium miner Albemarle (ALB), which closed the day 15.6% down after Tesla’s ‘battery day’, in which the electric carmaker revealed it is working on a project to reduce the amount of lithium it needs to make a battery. Tesla also revealed it plans to get into the lithium mining business itself, and has secured the rights to 10,000 acres of land in Nevada where it plans to extract the metal from clay deposits.

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