Stocks Advance Following Biggest Drop Since 2011 (Bloomberg)
Stocks advanced today, rebounding from the S&P 500’s biggest drop since November 2011, after Federal Reserve Chairman Ben Bernanke said that the central bank may phase out its stimulus. “To me this is just a normal correction reacting to some unexpected news,” Laszlo Birinyi, president of Birinyi Associates Inc., said. “I still think you’re in a bull market.”
Today the dollar stayed on track to hit its biggest weekly advance against major currencies in a year — since July 2012 — furthering its gains on the Fed’s announcement that it may begin to scale back its stimulus. “We’re very bullish right now on the U.S. dollar,” said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. However, Woolfolk said that the dollar was likely to gain regardless of the Fed’s actions: if the economy improves and the stimulus is scaled back, the dollar will benefit from expectations of higher interest rates; but if the economy is weak, the dollar will rise on safe-haven demand.
Billionaire Ron Baron, chairman and CEO of Baron Capitol, has advice for investors who might be apprehensive about the recent stock market gyrations and Federal Reserve Chairman Ben Bernanke’s taper comments: “don’t worry.” Baron wrote in an email to CNBC’s Becky Quick that he doesn’t “think turbulence will last.” Specifically, he blamed computer trading and persistent fear among traders who “remember [the U.S.] almost had [a] Depression five years ago.” Baron also added that America “narrowly escaped” an economic catastrophe due to Bernanke’s efforts during the 2008 financial crisis.