Yahoo Finance US Stock Indices Fell Due to Caution ahead of the FOMC Meeting
Junk Bond Issuance Rose Last Week Due to Positive Investor Sentiment
US stock indices fell
The three US equity indices that we review in this weekly series were down from April 19 to April 26, 2016, due to a drop in oil prices, weak corporate results, and soft economic data. Also, investors were trading cautiously ahead of the April 26–27 FOMC (Federal Open Market Committee) meeting. The Fed kept the interest rate unchanged. The tone of the meeting was crucial. It offered hints about an additional interest rate hike. A big question for investors will be how many times rates are anticipated to rise in 2016.
The S&P 500 index, tracked by the Vanguard 500 Index Fund Investor Class (VFINX) fell 0.4%, the Dow Jones Industrial Average (DJIA) fell 0.4%, and the NASDAQ fell 1.1%. The S&P 500 index is also tracked by the SPDR S&P 500 ETF (SPY). SPY fell 0.5% for the same period.
High-grade bond market
Treasury yields rose across the yield curve last week as oil prices rebounded and investors waited for clues on future interest rate increases from the Fed.
Investment-grade bond yields take cues from the Treasury market. They rose last week amid favorable economic data. With the rise in oil prices, it’s expected that inflation would rise. This strengthens the case for a rate hike this year. To learn more about the high-grade bond market, read Investment-Grade Bond Issuance Fell ahead of April’s FOMC Meeting.
Junk bonds
Junk bond yields fell sharply by 19 basis points week-over-week and ended at 7.7% on April 22, 2016—the lowest since November 9, 2015. Due to a fall in yields, the price of mutual funds and ETFs investing in junk bonds like the American Funds American High-Income Trust – Class A (AHITX), the T. Rowe Price High Yield Fund – Advisor Class (PAHIX), the SPDR Barclays Capital High Yield Bond ETF (JNK), and the iShares iBoxx $ High Yield Corporate Bond Fund (HYG) rose in the week ending April 22.
This series will cover the developments in the primary and secondary markets for high-yield debt and leveraged loans. We’ll start with developments in high-yield primary market issuance.
Browse this series on Market Realist:
