Dow Still Hooked on Monetary Stimulus
Japan was back at the center of financial news today, not because the Nikkei is still getting rocked back and forth, but because the island-nation's central bank refused to adjust monetary policy today in the midst of a huge market correction. In April, the Bank of Japan had announced a $1.4 trillion stimulus program with room for additional funding if needed, but today passed on that opportunity, though Bank of Japan governor Haruhiko Kuroda did say that the bank could unleash further stimulus if borrowing costs rise.
World markets were down on the news, with the Dow Jones Industrial Average finishing down 117 points, or 0.8%, in a volatile session, as the blue chips opened down 1% before climbing to breakeven at midday, and finally tanking in afternoon trading. As stocks pulled back, treasuries hit a 14-month high, with the 10-year yield climbing to 2.29% at one point.
Among the Dow's biggest losers today was Microsoft , which fell 1.8% as rival Sony introduced its PlayStation 4 last night and said would be priced at $399, $100 less than Microsoft's Xbox One. The two are major competitors in the gaming arena, and Sony's moves could put pressure on Microsoft. In addition to beating the Xbox on price, the PS4 also allows users to sell or reuse second-hand games and does not require a fixed Internet connection. Both consoles are due out this fall in time for the holiday season.
Disney shares bucked the overall trend, ending the day essentially unchanged as the media giant got an upgrade from Macquarie from "neutral" to "outperform." Analysts Tim Nollen and James Kopelman said that improved consumer spending should help bolster its theme parks, and new technology should also help improve visits. Recent acquisitions of Marvel and LucasFilm further enhance Disney's value and capabilities, they said.
Finally, Facebook CEO Mark Zuckerberg was back on the hot seat again, nearly a year after his company's IPO debacle. At the social network's first shareholder's meeting, Zuckerberg defended the company's first year despite a nearly 40% drop in the stock price in the meantime. Zuckerberg empathized with shareholders, saying, "We're disappointed with the performance of the stock over the past year," but he also stood by his strategy, adding, "Nothing in that has made me think the fundamental strategy is wrong." Still, investors were not pleased with his explanation and demanded to know when shares would return to their IPO price. Facebook ended the day down 1.2%.
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