Markets Consolidate and Keep Gains.
U.S. stock markets turned negative on Tuesday as President Donald Trump renewed his pressure on the Federal Reserve to cut interest rates further, hitting financial stocks in particular.
By 10:10 AM ET (1410 GMT), the Dow Jones Industrial Average was up 97 points, or 0.4%, at 24,319 points, while the S&P 500 and the Nasdaq Composite were both slightly down.
"As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the “GIFT”. Big numbers!" Trump tweeted.
JPMorgan (NYSE:JPM) stock fell 1.0% while Bank of America (NYSE:BAC) stock fell 0.9% and Citigroup (NYSE:C) stock fell 0.8%, reversing early gains, amid fear that even lower official interest rates will squeeze their profit margins as has been the case in other countries where the strategy has been tried, such as the euro zone and Japan.
Bank stocks had opened marginally higher, reassured by comments from three Federal Reserve officials in the last 24 hours downplaying the benefits of negative rates. Speculation that the Fed may cut the fed funds target range to below zero has increased in recent days as markets have moved to price in a slower, flatter recovery that charts more like a Nike-style swoosh than a V. There were fresh signs of the near-term deflationary impact on the economy from the pandemic earlier, as consumer prices fell by 0.8% in April, their biggest drop in over a decade.
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