Market Brief – Monday 5/18/20

Fed Chair Powell triggered the biggest buying spree in the history of the stock market as a record percentage of stocks on the New York Stock Exchange were bid higher following his interview on 60 Minutes last night where Powell claimed the Fed is printing money and can provide more monetary stimulus. Despite Powell’s claims, the Federal Reserve Act prohibits the Fed from printing money and Quantitative Easing, while it appears to be money printing, is not money printing.

Stocks surged higher in overnight trading and continued to rally in early trading as investors played chase as they believe the Fed can artificially raise asset prices. Treasury yields also rose but ran into resistance at the same level they have for the past three months. Crude oil was also trading higher after a report that China purchased over 200 million barrels of crude oil in April.

Investors played chase nearly into the closing bell as hopes for more monetary stimulus will somehow artificially boost stock prices, caused investors to buy. Treasury yields closed higher on the day to close an overhead gap where buyers stepped in. Tomorrow Fed Chair Powell speaks to Congress, where investors will once again hope for Powell to signal lower rates and more stimulus are coming.