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Wall St record run rolls on after Fed unveils anticipated bond-buying 'taper'

EconomyNov 03, 2021 08:26PM ET
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© Reuters. FILE PHOTO: A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 9, 2021. REUTERS/Andrew Kelly/File Photo

By Lewis Krauskopf, Devik Jain and Shashank Nayar

(Reuters) -Major Wall Street indexes posted solid gains and marked closing record highs as the Federal Reserve said it will begin trimming its monthly bond purchases in November with plans to end them in 2022, an announcement that investors had been expecting.

The S&P 500 and Nasdaq notched record all-time closes for their fifth straight sessions, while the Dow Jones Industrial Average posted a record close for the fourth session in a row.

The benchmark S&P 500 advanced into positive territory and ended solidly higher after the U.S. central bank announced plans to begin tapering its bond purchases. Investors had widely anticipated the decision as the Fed pulls back on its monetary support with the economy recovering from the coronavirus pandemic.

“The Fed did not rock the boat on this one," said Ryan Detrick, chief market strategist at LPL Financial (NASDAQ:LPLA). "It was fairly well-telegraphed what the Fed might do and they did what most people expected."

The Dow Jones Industrial Average rose 104.95 points, or 0.29%, to 36,157.58, the S&P 500 gained 29.92 points, or 0.65%, to 4,660.57 and the Nasdaq Composite added 161.98 points, or 1.04%, to 15,811.58.

Of the 11 S&P 500 sectors, consumer discretionary and materials were the top gainers, rising 1.8% and 1.1%, respectively. Energy lagged, falling 0.8%.

The central bank's easy money policies have been a significant support for markets, with the S&P 500 more than doubling since its March 2020 low at the onset of the pandemic.

The Fed also held to its belief that high inflation would prove "transitory" and likely not require a fast rise in interest rates.

“I don’t think that there’s anything unique in the statement other than the fact they’re trying to buy themselves time by saying both the inflation and supply chain disruptions are temporary, and that’s the bottom line," said Joseph LaVorgna, Americas chief economist at Natixis.

In a press conference after the Fed's statement, Fed Chair Jerome Powell said it is possible the U.S. job market may have improved enough by the middle of next year to be considered at "maximum employment," a key hurdle to clear for the central bank to consider increasing interest rates.

Better-than-expected third-quarter earnings also have helped lift sentiment for equities. With about 360 companies having reported, S&P 500 earnings are expected to have climbed 40.4% in the third quarter from a year earlier, according to Refinitiv IBES.

In company news, CVS Health (NYSE:CVS) shares rose 5.7% after the company said its adjusted profit target for 2022 should largely meet Wall Street estimates, as it expects volatile medical costs in its health insurance unit to stabilize.

Lyft (NASDAQ:LYFT) shares rose 8.2% after the ride-hailing company reported an adjusted profit for the third quarter.

Activision Blizzard Inc (NASDAQ:ATVI) shares tumbled 14.1% after the videogame publisher delayed the launch of two much-awaited titles. The stock was the biggest individual drag on the S&P 500.

Advancing issues outnumbered declining ones on the NYSE by a 2.01-to-1 ratio; on Nasdaq, a 2.11-to-1 ratio favored advancers.

The S&P 500 posted 55 new 52-week highs and three new lows; the Nasdaq Composite recorded 230 new highs and 38 new lows.

About 11 billion shares changed hands in U.S. exchanges, above the 10.3 billion daily average over the last 20 sessions.

Wall St record run rolls on after Fed unveils anticipated bond-buying 'taper'
 

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Comments (16)
Chris Sundo
Chris Sundo Nov 04, 2021 4:09AM ET
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With oil loosing ground and oil usually being a harbinger of what's to come and the market being EXTREMELY OVERBOUGHT, I'm concerned we may see a pullback soon, ... Be forwarned
perplexed76 .
perplexed76 . Nov 04, 2021 12:23AM ET
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"an announcement that investors had been expecting." good boy, powell, good boy.
William Bailey
William Bailey Nov 04, 2021 12:14AM ET
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Lies … markets kept going cause Fed pumped in 200 billion since Sunday night using reverse repo market …. Is why
Rodney Dangerfield
Rodney Dangerfield Nov 03, 2021 9:56PM ET
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89% of stocks are owned by those in the top 10% of wealth in the United States..... it's going to keep going up until the greed will be too much for people to handle they want you people to buy their way out
William Bailey
William Bailey Nov 03, 2021 9:56PM ET
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Top 5 percent , not top 10 percebt
Chris Sundo
Chris Sundo Nov 03, 2021 9:56PM ET
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Atlantic Coast Money
Atlantic Coast Money Nov 03, 2021 8:27PM ET
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Alright hopefully a healthy 2-3% pullback in the Russell before the next leg higher. Otherwise it seems they are going to squeeze the shorts out until OPEX this month. I would love to buy back my covered calls and sell December, but I can feel the euphoria. Similar to a stoner on a steamroller.
William Bailey
William Bailey Nov 03, 2021 3:32PM ET
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Fed QE tool done months ago, how so you ask!? Net sum game when 8.5 trillion balance sheet bonds expire at a faster rate than QE can repurchase them… QE doing nuthin now! As bonds expire on the balance sheet that cash that never exsisted evaporates from tbe economy … worse yet, the goverment still owes the debt, you! Worse yet , billionaires dont pay for fair share of taxes and tax base shrinking and economy stagnant and debt buyers will fall off.. we will default
Ronald Warren
Ronald Warren Nov 03, 2021 1:16PM ET
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If Powell tapers the selloff will come in the middle of the night.
William Bailey
William Bailey Nov 03, 2021 1:16PM ET
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Awaone!!!
Francesco Lucchesi
Francesco Lucchesi Nov 03, 2021 1:12PM ET
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the taper is priced in already. what will move markets will be the talk about rates.
Benedict Makhotla
Benedict Makhotla Nov 03, 2021 1:12PM ET
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What is it saying
William Bailey
William Bailey Nov 03, 2021 1:12PM ET
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Escape hatch soon
John Lakran
John Lakran Nov 03, 2021 1:12PM ET
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How is the taper priced in already qqq up 10% in past 20 days before taper even starts. Money will have to start to flow out when it disappears and then what?
Lucas Folloni
Lucas Folloni Nov 03, 2021 12:40PM ET
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Spoil of what will happen. "We still see signs of recovery in the economy and will delay the tapering to 2022, just kidding we will never go tapering mode, cus we can't do it without imploding the global economy."
Abhay Tiwari
Abhay Tiwari Nov 03, 2021 12:40PM ET
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it means tapering will not start...?
Stan Smith
Stan Smith Nov 03, 2021 12:34PM ET
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There will be taper TALK once again designed to shift markets in the 'desired' direction.
James Pattison
James Pattison Nov 03, 2021 12:14PM ET
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The taper is baked in… surprises will move markets
Mohd Izhar Muslim
Mohd Izhar Muslim Nov 03, 2021 11:51AM ET
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straight to the brightness 👍
John Shiels
John Shiels Nov 03, 2021 9:49AM ET
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The invisible government is making a lot of mistakes these days.
Kaveh Sun
Kaveh Sun Nov 03, 2021 9:34AM ET
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Traders trader Over 70% of daily volume. If u trade in front of a fed meeting, it is gambling.
Steffen vdm
Steffen vdm Nov 03, 2021 9:34AM ET
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Unless you have some useful information...
Kaveh Sun
Kaveh Sun Nov 03, 2021 9:32AM ET
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Reuters cant tell traders vs investors. Investors r in it for a long time. They dont care about a few days fluctuation by the fed. They care about the companies growth, revenue n profit margin. They care about big econ macro to rotate their holding.
Joe Bitman
Joe Bitman Nov 03, 2021 9:32AM ET
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Yes true but if fed stops printing $, it will affect all share prices and profits of those LT holdings
Rob Pira
Rob Pira Nov 03, 2021 9:32AM ET
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That was true in the old days, before the thing called the Greenspan/Bernanke/Yellen/Powell put.
Will Stewart
Will Stewart Nov 03, 2021 8:11AM ET
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If fed can do 5 or 6 half-a-point interest rate hikes next year, it may make a slight dent in the Highest inflation in more than two decades.
Stan Smith
Stan Smith Nov 03, 2021 8:11AM ET
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And a huge dent in markets, the economy and and everything in between
 
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