Markets fall, could “grind higher” with continued Fed stimulus

Markets mostly fell on Thursday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 fell 1 percent and the Nikkei 225 fell 1.2 percent.

However, the Shanghai Composite rose 1.0 percent. Reports on Thursday showed that China's GDP grew 7.9 percent year-on-year in the second quarter while retail sales and industrial production rose 12.1 and 8.3 percent respectively in June from a year earlier.

In the US, stocks fell despite positive data. Initial jobless claims for the week ending 10 July was 360,000, a new pandemic-era low, while second-quarter earnings results continued to beat expectations.

“A lot of news has been priced in,” suggested Liz Ann Sonders, chief investment strategist at Charles Schwab.

Still, Federal Reserve Chair Jerome Powell on Thursday told the Senate banking panel that the central bank will maintain its accommodative monetary policies unless high inflation is sustained for a longer period than is currently expected.

Jeffrey Gundlach, DoubleLine Capital chief executive, said that as long as the Fed maintains its “free money stimulus ... I think the stock market can stay at nosebleed levels as it has been and continue to grind higher”.