Monday, October 18, 2021

S&P 500 Rallies, Takes Fed November Taper Signal in Stride

Must read

imageStock Markets18 minutes ago (Sep 22, 2021 03:52PM ET)

(C) Reuters.

By Yasin Ebrahim – The S&P 500 climbed Wednesday, led by energy and financials as the broader market took the Fed’s signal of a potential November taper in its stride.

The S&P 500 rose 1%, the Dow Jones Industrial Average gained 1.1%, or 369 points, the Nasdaq climbed 0.8%.

“If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the Fed said in a statement.

Fed chair Jerome Powell later signaled the taper could get underway in November, and end in mid-2022. “Participants generally view, so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate,” Powell said in a press conference that followed the monetary policy statement.

Leading up to the meeting, however, many analysts were betting on a November taper, and suggested that the announcement was priced in.

Cyclical sectors including energy climbed more than 3%, underpinned by rising oil prices following data showing weekly U.S. oil supplies fell by a more than expected last week.

Crude oil inventories fell by 4.7 million barrels last week, compared with analysts’ expectations for a draw of 2.4 million barrels.

Sentiment on oil has also been supported by “news that the OPEC countries of Nigeria and Angola, and OPEC+ member Kazakhstan, have lasting difficulties expanding their production due to a lack of investment,” Commerzbank (DE:CBKG) said in a note.

In a further boost to sentiment on cyclical stocks – those that move in tandem with the economy – China contagion fears subsided after Evergrande agreed to settle interest payments on a domestic bond on Wednesday, and the central of China pumped further liquidity into the financial system.

In big tech, meanwhile, Facebook (NASDAQ:FB), down 4%, proved a drag on the sector after the social media giant warned that Apple (NASDAQ:AAPL) ad-tracking would hurt growth.

The broader market’s attempt at mounting a rebound comes just ahead of the Federal Reserve monetary policy decision, with the Fed’s plan on tapering its bond purchases likely to dominate investor attention.

“The FOMC will conclude its 2 day meeting this afternoon (9/22) with most expecting the Fed to begin to signal (or least give hints) to the start of tapering in November,” Credit Suisse (SIX:CSGN) said in a note.

S&P 500 Rallies, Takes Fed November Taper Signal in Stride

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Latest article