US Stocks surge on Fed's corporate bond-buying plan

The US stocks finished volatile session higher on Monday, 15 June 2020, as late hour bargain hunting after the Federal Reserve said it would begin buying the debt issued by individual companies in a new effort to keep credit flowing. However, market gains were capped as continued worries about the economy amid emerging second wave of the epidemic.

At closing bell, the Dow Jones Industrial Average rose 157.62 points, or 0.6%, to 25,763.16. The S&P 500 index climbed 25.28 points, or 0.8%, at 3,066.59, after having spent most of the day in negative territory. The tech-heavy Nasdaq Composite Index surged up 137.21 points, or 1.4%, to 9,726.02.

 

The Federal Reserve said on Monday that it would begin to buy debt issued by individual corporations based on a broad index of corporate bonds in the United States, a new step in the central bank's efforts to keep credit flowing freely amid the coronavirus pandemic. Officials voted unanimously to expand the so-called Secondary Market Corporate Credit Facility, which it unveiled in May. The program is meant to allow companies to continue borrowing money at a time of high stress on the financial system following the steep economic decline from the pandemic.

However, market gains were capped as continued worries about the economy amid emerging second wave of the epidemic. In the United States, coronavirus cases in more than 20 states, including California, Florida, and Nevada showed a recent increase, and Texas and North Carolina also reported a record number of coronavirus-related hospitalizations on Saturday, adding to worries that businesses reopening may drive a second wave. Gov. Andrew M. Cuomo of New York said that the state might have to reinstate lockdown conditions.

ECONOMIC NEWS: New York Manufacturing Activity Stabilizes In June- New York manufacturing activity steadied in the month of June after seeing sharp contractions in April and May, according to a report released by the Federal Reserve Bank of New York on Monday. The New York Fed said its general business conditions index spiked to negative 0.2 in June from negative 48.5 in May. A negative reading indicates a contraction in regional manufacturing activity. The much bigger than expected increase by the headline index came as the shipments index returned to positive territory, jumping to 3.3 in June from negative 39.0 in May. The new orders index also showed a substantial recovery, soaring to negative 0.6 in June from negative 42.4 in May, indicating new orders were nearly unchanged. While the number of employees index also rose to negative 3.5 in June from negative 6.1 in May, a negative reading still indicates a loss of jobs. The report also said the prices paid index climbed to 16.9 in June from 4.1 in May, while the prices received index increased to negative 0.6 from negative 7.4. Looking ahead, the New York Fed said firms were notably more optimistic that conditions would be better in six months. The index for future business conditions surged up to 56.5 in June from 29.1 in May, reaching its highest level in more than a decade.

Among Indian ADR, Vedanta added 2.04% to $5.51, WNS Holdings inclined 0.69% to $54.05, INFOSYS climbed up 1.21% to $9.22, Dr Reddys Labs rose 2.77% to $53.85, and Wipro grew 6.67% to $3.36, while HDFC Bank fell 1.3% to $41.78, ICICI Bank dropped 1% to $8.91, and Tata Motors dropped 4.14% to $6.71.

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