Stocks fall, bond yields tumble after Fed's latest rate hike

Stocks fall, bond yields tumble after Fed's latest rate hike

NEW YORK — Stocks fell sharply Wednesday after the Federal Reserve indicated the end may be near for its economy-crunching hikes to interest rates, but it also doesn’t expect to cut rates soon despite Wall Street’s hopes.

The S&P 500 fell 1.6% in its first drop in three days. The Dow Jones Industrial Average lost 530 points, or 1.6%, while the Nasdaq composite dropped 1.6%.

Some of the sharpest drops came again from the banking industry, where investors are worried about the possibility of customers yanking their cash and causing more collapses. They slid after Treasury Secretary Janet Yellen said Wednesday she’s not considering blanket protection for all depositors at all banks, unless they present a risk to the overall system.

Stocks of smaller- and mid-sized banks fell sharply. First Republic Bank dropped 15.5%, and PacWest Bancorp. fell 17.1%.

People are also reading…

Stocks saw little change for much of the day, before the Fed raised its key rate by a quarter of a percentage point in its campaign to drive down inflation. The bigger question was where the Fed is heading next. The Fed hinted it may not hike rates much more as it assesses the fallout from the banking industry’s crisis.

Instead of repeating its statement that “ongoing increases will be appropriate,” the Fed said Wednesday it now only sees “some additional policy firming may be appropriate.”

The Fed also released the latest set of projections from its policymakers on where rates are heading in upcoming years. The median forecast had the federal funds rate sitting at 5.1% at the end of this year, up a smidge from where it currently sits, in a range of 4.75% to 5%.

That’s also the same level as seen in December, and it’s counter to worries in the market that it could rise given how stubborn high inflation has remained.

That helped send yields slumping in the bond market, which has been home to some of the wildest action this month.

The yield on the two-year Treasury, which tends to track expectations for the Fed, tumbled to 3.96% from 4.13% just before the projections were released. It was above 5% earlier this month.

All told, the S&P 500 fell 65.90 points to 3,936.97. The Dow dropped 530.49 to 32,030.11, and the Nasdaq fell 190.15 to 11,669.96.

Some of the biggest excitement was around what are called “meme stocks.”

GameStop shot up 35.2% after it reported a surprise profit for its latest quarter. Analysts were expecting another loss for the struggling video-game retailer. In early 2021, hordes of smaller-pocketed and novice investors piled into the stock, sending its price surging.

Source link

Federal Reserve raises its key rate by a quarter-point; calls banking system 'sound and resilient'

Federal Reserve raises its key rate by a quarter-point; calls banking system 'sound and resilient'

WASHINGTON (AP) — The Federal Reserve extended its year-long fight against high inflation Wednesday by raising its key interest rate a quarter-point despite concerns that higher borrowing rates could worsen the turmoil that has gripped the banking system.

“The U.S. banking system is sound and resilient,” the Fed said in a written statement released after its two-day meeting.

At the same time, the Fed warned that the financial upheaval stemming from the collapse of two major banks is “likely to result in tighter credit conditions” and “weigh on economic activity, hiring and inflation.”

The central bank also signaled that it’s likely nearing the end of its aggressive series of rate hikes. In a statement it issued, it removed language that had previously indicated that it would keep raising rates at upcoming meetings. The statement now says “some additional policy firming may be appropriate” — a weaker commitment to future hikes.

People are also reading…

And in a series of quarterly economic projections, Fed officials forecast that they expect to raise their key rate just one more time – from its new level Wednesday of about 4.9% to 5.1%. That is the same peak level they had projected in December.

The latest rate hike suggests that Chair Jerome Powell is confident that the Fed can manage a dual challenge: Cool still-high inflation through higher loan rates while defusing the financial upheaval in the banking sector through emergency lending programs and the Biden administration’s decision to cover uninsured deposits at two failed U.S. banks.

The Fed’s decision to signal that the end of its rate-hike campaign is in sight may also soothe financial markets as they continue to digest the consequences of U.S. banking turmoil and the takeover last weekend of Swiss bank Credit Suisse by its larger rival.

The Fed’s benchmark short-term rate has now reached its highest level in 16 years. The new level will likely lead to higher costs for many loans, from mortgages and auto purchases to credit cards and corporate borrowing. The succession of Fed rate hikes have also heightened the risk of a recession.

The Fed’s latest decision, after a two-day policy meeting, reflects an abrupt shift. Early this month, Powell had told a Senate panel that the Fed was considering raising its rate by a substantial half-point. At the time, hiring and consumer spending had strengthened more than expected, and inflation data had been revised higher.

In its statement, the Fed included some language that indicated that its fight against inflation is still far from complete. It said that hiring is “running at a robust pace” and noted that “inflation remains elevated.” It removed the phrase, “inflation has eased somewhat,” which it had included in its statement in February.

The troubles that suddenly erupted in the banking sector two weeks ago likely led to the Fed’s decision Wednesday to impose a smaller rate hike. Some economists have cautioned that even a modest quarter-point rise in the Fed’s key rate, on top of its previous hikes, could imperil weaker banks whose nervous customers may decide to withdraw significant deposits.

Silicon Valley Bank and Signature Bank were both brought down, indirectly, by higher rates, which pummeled the value of the Treasurys and other bonds they owned. As anxious depositors withdrew their money en masse, the banks had to sell the bonds at a loss to pay the depositors. They were unable to raise enough cash to do so.

After the fall of the two banks, the Swiss bank Credit Suisse was taken over by its larger rival UBS last weekend. Another struggling bank, First Republic, has received large deposits from its rivals in a show of support, though its share price plunged Monday before stabilizing.

This is an update. The rest of AP’s earlier story follows below.

Source link

Fourth apartment building rising at Stonebridge

Fourth apartment building rising at Stonebridge

The four- and five-story building is planned to house 252 apartments. (Jonathan Spiers photos)

As work starts across the street on a massive mixed-use development at the Spring Rock Green shopping center site, new construction at the further-along Stonebridge development is likewise turning heads along Midlothian Turnpike and Chippenham Parkway.

Framing is underway for Aura Stonebridge, a 252-unit apartment building by Dallas-based developer Trinsic Residential Group. The four- and five-story structure is taking shape between the Kroger grocery store and the three-building Element at Stonebridge apartments.

Planned to total 268,500 square feet, the Aura building is filling a 4-acre parcel that Trinsic purchased through an LLC last July. Chesterfield property records show the LLC paid $5.54 million for the parcel at 311 Karl Linn Drive.

The county had assessed the property last year at $1.4 million. It’s currently assessed at $4.6 million.

The seller was an LLC tied to Boyd Homes, the Virginia Beach-based firm that developed Element at Stonebridge and had positioned the parcel for a second phase of apartments. It sold the 400-unit complex last August to Florida-based American Landmark Apartments in a $96 million loan assumption deal.

The building is planned to total 268,500 square feet.

The Aura project appears to be the first in the region for Trinsic, which focuses on multifamily residential developments. The company’s website lists Aura as its only project in the Mid-Atlantic region.

Beyond its home state of Texas, Trinsic also is active in Arizona, Colorado, Florida and the Carolinas, where it’s currently building other Aura-branded developments in Chapel Hill and Durham. Its website says it controls more than 20,000 units valued at more than $4 billion.

Attempts to reach the company for comment were unsuccessful. A message left on the company’s corporate office number Friday and an email to its regional director were not returned.

The company’s website does not list monthly rents for Aura Stonebridge, which will consist of one-, two- and three-bedroom units. Surface parking totaling 274 spaces will surround the building, which will include air-conditioned corridors and elevators. Planned amenities include a pool, fitness and business centers and a clubroom.

A rendering of the Aura Stonebridge building. (Image courtesy Trinsic Residential Group)

Aura is scheduled for completion by mid-2024. Utah-based Colt Builders is constructing the project, which was designed by Glen Allen-based Poole & Poole Architecture. Chesterfield-based Timmons Group is the engineer and landscape architect.

Aura’s construction coincides with the demolition this week of the Spring Rock Green shopping center across Midlothian Turnpike, where Chesterfield County is spearheading a massive mixed-use development called Springline at District 60. The District 60 branding for the area will also include Stonebridge and the nearby Boulders office park.

Also in the works for Stonebridge is Shamin Hotels’ plan for a mixed-use development to include a 250-room Embassy Suites hotel and conference center, 300 apartments and 10,000 square feet of retail space that could include a brewery. Shamin CEO Neil Amin said the project is in the site plan review stage and has been revised a few times based on feedback from county planning staff.

The Shamin development would fill the vacant 14-acre parcel between the Firestone service center and Richmond Volleyball Club’s Stonebridge facility. Amin said a timeframe for the project is contingent on plan approval.

Another project in the pipeline is Starview Village, a mixed-use development planned to fill 110 acres generally south of Stonebridge with 1,250 residential units that would share buildings with lower-level office and retail spaces.

Zoning for that project was approved in 2020. A construction schedule has yet to be announced. A 2022 marketing flier for Stonebridge from Taylor Long Properties listed 2024 as an estimated groundbreaking date for Starview Village.

Source link

Part of old Goochland golf course back up for sale as proposed Covid memorial is put on hold

Part of old Goochland golf course back up for sale as proposed Covid memorial is put on hold

Humanitarian Ambassadors of America Community Development Corp. bought 151 acres of the former Royal Virginian Golf Course. (Photos courtesy of Humanitarian Ambassadors of America CDC)

Less than a year after being purchased by a local nonprofit, a portion of a long-dormant Goochland golf course is back up for grabs as the owner rethinks its plans for converting the site into a Covid memorial.

Approximately 150 acres that were once part of Royal Virginian Golf Course were listed for sale last week for $1.8 million.

The seller is Humanitarian Ambassadors of America Community Development Corp., which bought the same acreage in May 2022 for $750,000.

Led by Arlene Simmons, the group’s initial vision for the property included a memorial for those who died from Covid, along with rock gardens, water features, vegetable gardens and agricultural and educational programs. The plan was budgeted to cost $33 million, much of which was to be donated.

But Simmons said this week that her Goochland plans are on hold while her organization deals with the loss of multiple key members due to illnesses and deaths.

Arlene Simmons

“Due to some issues, it’s back on the market as of Friday and we are exploring options as far as the property is concerned,” Simmons said. “We’ve put everything on hold right now.”

Simmons said the listing doesn’t necessarily spell the end of the memorial project altogether, as it may take shape in another location elsewhere in the region. She said they are looking for a new site for the memorial closer to her group’s headquarters in South Richmond.

“In the meantime we are exploring an alternative (memorial site), something closer to home because we don’t have the manpower now to be able to do this in Goochland,” she said.

Simmons’ nonprofit has been around for 25 years. She describes the group as community advocates doing work related to issues of health, crime and homelessness. She said the group helped relocate the homeless after the closure of the so-called “Tent City” in the city of Richmond during the pandemic. The group also accepts and distributes in-kind donations for larger nonprofits during instances of disaster or trauma.

The idea for a Covid memorial came to her after several of her relatives died after being stricken with the virus, and also volunteering as a hospice counselor for Covid patients and their families.

With the vision for the memorial in her mind, she then set out to find a tranquil setting somewhere in the region. She found just that at the old golf course that’s been mostly reclaimed by nature.

Hole markers still remain on the old course. (BizSense file)

The Royal Virginian course fell into foreclosure in 2011 and sold for $525,000, before being purchased by an entity tied to Charlotteville businessman Justin Beights in 2018 for $750,000. Beights then shuttered the course and has since floated uses for the pastoral property, including planting trees for conservation tax credits and creating substance abuse recovery homes near a pond on the site.

Beights still owns the course’s remaining 107 acres, which sits across Royal Virginian Parkway from Simmons’ portion.

A message left for Beights this week was not returned.

Simmons said her efforts in Goochland went as far as holding an honorary groundbreaking last year, doing minor clearing and renovations at the course’s old clubhouse, and meeting with county administrators last month.

Simmons’ group is represented in the sale by Stephanie Taylor of EXP Realty, who also handled the group’s purchase of the land.

“We’re asking people to bring any options to the table,” Simmons said.

“We remain excited about honoring those who have lost their lives to Covid and to health challenges and those that are grieving. And just doing everything that will strengthen people’s outlook on health and the daily challenges.”

Source link

Google's artificially intelligent 'Bard' set for next stage

Google's artificially intelligent 'Bard' set for next stage

Google announced Tuesday it’s allowing more people to interact with ” Bard,” the artificially intelligent chatbot the company is building to counter Microsoft’s early lead in a pivotal battleground of technology.

In Bard’s next stage, Google on Tuesday opened a waitlist to use its AI tool that is similar to the ChatGPT technology Microsoft deployed in its Bing search engine to much fanfare last month. Last week, Microsoft embedded more AI-powered technology in its word processing, spreadsheet and slide presentation programs with a new feature called Copilot.

Until now, Bard was available to only a small group of “trusted testers” hand-picked by Google. The Mountain View, California, company, which is owned by Alphabet Inc., isn’t saying how many people will be given access to Bard in the next step of the technology’s development. Initial applicants will be limited to the United States and the United Kingdom before Google offers Bard in more countries.

People are also reading…

Google Artificial Intelligence

The Google logo is displayed Nov. 1, 2018, at the company’s offices in Granary Square in London.

Google is treading carefully with the rollout of its AI tools, in part because it has more to lose if the technology spits out inaccurate information or takes its users down dark corridors. That’s because Google’s dominant search engine has become a de facto gateway to the internet for billions of people, raising the risk of a massive backlash that could tarnish its image and undercut its ad-driven business if the technology behaves badly.

Despite the technology’s pitfalls, Bard still offers “incredible benefits” such as “jumpstarting human productivity, creativity and curiosity,” Google said in a blog post that two of its vice presidents — Sissie Hsiao and Eli Collins — wrote with assistance from Bard.

As a precautionary measure, Google is limiting the amount of interaction that can occur between Bard and its users — a tactic Microsoft imposed with ChatGPT after media coverage detailed instances when the technology likened an Associated Press reporter to Hitler and tried to persuade a New York Times reporter to divorce his wife.

Google also is providing access to Bard through a separate site from its search engine, which serves as the foundation for the digital ads that generate most of its profits. In a tacit acknowledgement that Bard may be prone to straying into manufacturing falsehoods, which are being called “hallucinations” in technology circles, Google provides a query box connected to its search engine to make it easier for users to check the accuracy of information displayed by the AI.

Bard made an embarrassing blunder shortly after Google unveiled the tool by prominently displaying a wrong answer about a scientific milestone during a presentation that was supposed to show how smart the technology could be. The gaffe contributed to a nearly 8% drop in Alphabet’s stock in a single day, wiping out about $100 billion in shareholder wealth and underscoring how closely investors are watching how Google handles AI.

Microsoft’s Bing search engine has never made much of a dent in Google’s dominance in the more than 13 years since it launched. Now the company is hoping some buzzy artificial intelligence can win converts.

A president’s State of the Union address has a predictable formula. But what if a computer program were to write it? The Associated Press asked the ChatGPT bot to do just that.

The rapid emergence of the technology has also raised serious ethical questions, especially since it is being taken to market at a breakneck speed.

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. This week’s episode starts with testing out ChatGPT’s ability to give financial advice.

The maker of ChatGPT is trying to curb its reputation as a freewheeling cheating machine with a new tool that can help teachers detect if a student or artificial intelligence wrote that homework.

ChatGPT, which was created to answer user questions in a conversational manner, has generated so much buzz that doctors and scientists are trying to determine what its limitations are — and what it could do for health and medicine.

A popular online chatbot powered by artificial intelligence is proving to be adept at creating disinformation and propaganda.

While good fun, I feel like my critic job is safe for now.

Source link

Stocks rise for first 2-day rally since banking crisis began

Stocks rise for first 2-day rally since banking crisis began

NEW YORK — Stocks rallied Tuesday, led by the banks most beaten down by the industry’s crisis, and some of Wall Street’s fear washed out on hopes the U.S. government will offer more help if needed.

The S&P 500 jumped 1.3% to lock in its first back-to-back gain since Silicon Valley Bank’s failure two weeks ago. The Dow Jones Industrial Average rose 316 points, or 1%, while the Nasdaq composite jumped 1.6%.

Markets around the world pinballed this month on worries the banking system may crack under the pressure of the fastest set of hikes to interest rates in decades. This week’s rally now runs into a huge test: On Wednesday afternoon, the Federal Reserve is expected to announce another increase to rates.

All the turmoil in the banking industry has traders betting the Fed will stick with an increase of 0.25 percentage point Wednesday.

People are also reading…

The S&P 500 rose 51.30 points to 4,002.87 on Tuesday. The Dow gained 316.02 to 32,560.60, and the Nasdaq climbed 184.57 to 11,860.11.

Stocks also rallied across Europe and Asia.

In the bond market, the yield on the two-year Treasury rose to 4.17% from 3.97% late Monday. The 10-year Treasury yield rose to 3.60% from 3.44%.

Financial Markets Wall Street

People pass the front of the New York Stock Exchange on Tuesday in New York.

Tuesday’s strength for stocks came after Treasury Secretary Janet Yellen told a bankers’ group more government assistance “could be warranted” if risks arise that could bring down the system. That could mean making sure customers at a weakened bank get all their money, even those with more than the $250,000 limit insured by the Federal Deposit Insurance Corp.

Earlier this month, the U.S. government said it would make all depositors at Silicon Valley Bank and Signature Bank whole. They were the second- and third-largest U.S. bank failures in history.

Those banks struggled as depositors rushed to pull their money out en masse — such runs can topple a bank.

First Republic Bank, which shares some similar traits with Silicon Valley Bank, saw its stock lose 90% for the month through Monday. It jumped 29.5% Tuesday.

Other smaller and mid-sized banks also rallied, including a 9.1% climb for Comerica and a 9.3% jump for KeyCorp.

Hopes for the banking industry began to turn over the weekend after regulators pushed together two huge Swiss banks. Shares of both banks rose Tuesday in Switzerland, including a 12.1% jump for acquirer UBS. Credit Suisse rose 7.3% after tumbling a day earlier.

Central banks jacked up interest rates in hopes of getting high inflation under control by slowing the economy. Higher rates hurt prices for stocks and other investments — one of the factors that hurt Silicon Valley Bank, which saw the value of its bond investments drop with the rise in rates.

Source link