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Federal Reserve Now Expects Two Rate Hikes By The End Of 2023

Federal Reserve Now Expects Two Rate Hikes By The End Of 2023

Plus, jobless claims unexpectedly rose last week, Curevac shares are down after the company said its COVID-19 vaccine was only 47% effective in interim results for a large late-stage trial, and Microsoft CEO Nadella was elected chairman of the company’s board.

Stocks were lower at the open with the Dow dropping 19 points, or less than 0.1%. The S&P 500 slid less than 0.1% lower, while the Nasdaq fell nearly 0.3%.

The Fed moved up its timeline for rate hikes on Wednesday amid optimism about the labor market and heightened concerns for inflation. Fed Chair Jerome Powell said the central bank will begin discussing scaling back bond purchases used to support financial markets and the economy during the pandemic and now expects two interest rate increases by the end of 2023, pushing up the timeline significantly. “The economy has clearly made progress,” Powell said. “You can think of this meeting as the talking-about-talking-about meeting, if you like.” Kathy Jones, head of fixed income at Charles Schwab, said, “If you’re going to get two rate hikes in 2023, you have to start tapering fairly soon to reach that goal. It takes maybe 10 months to a year to taper at a moderate pace. Then you’re looking at we need to start tapering maybe later this year, and if the economy continues to run a little bit hot, rate hikes sooner rather than later.”

Jobless claims unexpectedly rose last week. The Labor Department reported first-time filings of 412,000 for the week ended June 12, marking the highest reading since May 15. Fed Chair Powell said, “factors related to the pandemic, such as caregiving needs, ongoing fears of the virus, and unemployment insurance payments appear to be weighing on employment growth. These factors should wane in coming months against a backdrop of rising vaccinations leading to more rapid gains in employment.”

Curevac shares are down nearly 44% at the time of writing after the biopharmaceutical company said its COVID-19 vaccine candidate demonstrated just 47% efficacy against the disease “of any severity” in a late-stage trial with around 40,000 participants across 10 countries. “While we were hoping for a stronger interim outcome, we recognize that demonstrating high efficacy in this unprecedented broad diversity of variants is challenging,” said CEO Franz-Werner Haas in a statement. “As we are continuing toward the final analysis with a minimum of 80 additional cases, the overall vaccine efficacy may change.” Jefferies analyst Eun K. Yang called the results “quite disappointing” and cut his price target for the company from $58 to $45. “This could cast doubt on the competitiveness of its mRNA platform,” Yang said.

JPMorgan said it is buying British online investment management platform Nutmeg for an undisclosed amount. The acquisition will complement the bank’s plans to launch a standalone digital bank brand in the U.K. later this year. “We are building Chase in the U.K. from scratch using the very latest technology and putting the customer’s experience at the heart of our offering, principles that Nutmeg shares with us,” Sanoke Viswanathan, CEO of international consumer at JPMorgan, said in a statement. “We look forward to positioning their award winning products alongside our own, and continuing to support their innovative work in retail wealth management.”

And Microsoft CEO Satya Nadella has been named chairman of the company’s board by unanimous vote. Nadella will be replacing John Thompson, who will return to the role of lead independent director. “In this role, Nadella will lead the work to set the agenda for the board, leveraging his deep understanding of he business to elevate the right strategic opportunities and identify key risks and mitigation approaches for the board’s review,” Microsoft said in a statement.  “As lead independent director, Thompson will retain significant authority including providing input on behalf of the independent directors on board agendas, calling meetings of the independent directors, setting agendas for executive sessions, and leading performance evaluations of the CEO.”

Stocks We’re Watching

MannKind Corp (NASDAQ: MNKD): MannKind shares are up nearly 3% this morning after the company announced yesterday that the FDA had accepted for priority review the New Drug Application for Tyvaso DPI for the treatment of pulmonary arterial hypertension and pulmonary hupertension associated with interstitial lung disease. “We are energized by the acceptance of the Tyvaso DPI NDA for priority review,” said Michael Castagna, PharmD, Chief Executive Officer of MannKind Corporation. “MannKind is driven to deliver therapeutics in ways that can help improve patient lives for the better. With this key regulatory step, we are excited to progress the next Technosphere product towards providing thousands of PAH and PH-ILD patients a more convenient method of treprostinil therapy administration.”

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