The Dow Jones Industrial Average (DJINDICES:^DJI) jumped 135 points Monday to finish the first quarter about flat on the year.
1. Janet Yellen reassures Wall Street (and Main Street) that stimulus will keep flowing
Stimulus is here to stay. That's the message from the Federal Reserve's recently appointed chairwoman, Janet Yellen. In a speech in Chicago, the head of America's central bank made clear that "the scars of the great recession remain" and Americans still need economy-boosting stimulus measures to help boost job opportunities.
Why the sudden stimulus love? Because just a couple of weeks ago, Yellen gave a press conference and mentioned that benchmark interest rates would rise within six months of ending its stimulus policies. Investors love stimulus, so markets dropped on the news.
But Monday Yellen dropped all sorts of anecdotes about regular Americans still struggling in the poor job market and clarified that stimulus won't disappear soon. For someone in such a lofty position -- the queen of global finance -- it was quite a populist tone.
Keep in mind that stimulus is a reference to the Fed's "quantitative easing," or QE policy, in which the central bank buys billions in long-term bonds to drive down interest rates -- low interest rates encourage consumers to take out loans and buy economy-boostin' products (we're looking at you, Shake Weights). It also encourages investors to take risks in the low-interest-rate environment.
The takeaway is that investors crave stimulus like it's an extra-chocolate protein shake for the economy. As the economy showed improvement over 2013, the Fed has decreased its monthly bond purchases over the past few months from $85 billion to $55 billion -- and investors have been worried about seeing the stim juice slow. But Yellen's speech Monday reassured Wall Street that there's still plenty of stimulus in store, since the economy's sore muscles need it.
2. Noah debut keeps Viacom stock floating
It's a miracle for shareholders of Viacom (NASDAQ:VIA). In addition to Comedy Central and BET, the mega-media conglomerate owns Paramount film studios, whose biblical epic Noah brought in an OMG-worthy $44 million over its opening weekend. That's a holy 7% more than the projections from boxoffice.com, sending Viacom stock up 0.7% Monday.
The takeaway is that Noah wasn't just fighting floodwaters -- he's taking on last week's reigning box office champ, Divergent, the creepy teenager-focused film from Lions Gate Entertainment (NYSE:LGF-A). Now, Viacom and Paramount execs are hoping Noah can keep on building revenue worldwide that would make God proud after launching in over 20 countries this past the weekend.
3. General Motors continues its slide ahead of Congressional testimony
What the heck, Mary? In her first few months on the job, Mary Barra has been the whipping girl. The brand-new CEO, who took over management of General Motors (NYSE:GM) at the beginning of this year, is dealing with a massive recall that's caused a 16% drop for America's biggest auto stock this quarter.
GM dropped the ball when it built a ton of vehicles starting in the early 2000s that had faulty ignition switches (the car would shut off if your keychain was too heavy). Then it really dropped the ball by not doing anything about it for 10 years. Twelve deaths are linked to GM's negligence, and it's facing an onslaught of angry drivers, sad survivors, and the freaking federal government.
Barra was announced as GM's next CEO the day after the U.S. government ended the automotive bailout by selling its last shares. It was supposed to be exciting, like the first day of spring. Instead, Barra has recalled 2.6 million cars (plus even more trucks with steering problems) and said "I'm sorry" 100 times for mistakes that were made before she controlled the company.
The House and the Senate will have their chance to grill Barra on Tuesday and Wednesday, and the stock will have another chance to tumble as vehicle recalls continue to crush profits. The stock fell another 0.9% Monday, capping GM's horrible first quarter.
- Motor Vehicle Sales
- ISM Manufacturing Index