Finance News

Inventory futures are flat after Fed feedback pushed key averages to new highs

US stock index futures remained stable during Wednesday's overnight trading after major averages closed at record levels following comment from the Federal Reserve. The central bank announced that it would slow down its bond-buying program, signaling that the economy can now handle a reduction in pandemic incentives.

Futures contracts pegged to the Dow Jones Industrial Average fell 8 points. S&P 500 futures were unchanged and Nasdaq 100 futures rose 0.05%.

During regular trading, the Dow gained about 105 points, making its fifth positive session in a row. The 30-stock benchmark hit its 51st record intraday high of the year and 42nd record close of 2021.

The S&P 500 also had its fifth straight day of profits, up 0.65%. The index made its 74th intraday high and 61st record close of the year.

The Nasdaq Composite was up 1.04% and is in its longest daily winning streak since June 2020 after eight days in a row. The tech-heavy index hit both its 41st record high and closing price on Wednesday.

"The Fed's throttling announcement removes a minor but lingering concern in markets as investors have waited months for this moment, and reinforces the view that economic recovery has a long way to go, albeit at a slow rate of growth "said George Ball, chairman of Sanders Morris Harris.

"The announcement of the Fed's throttling signals economic strength, which is good for corporate earnings and the markets," he added.

The central bank announced that it would slow the pace of its monthly bond purchase program "later this month". This marks the beginning of the Fed's removal of the substantial incentives it has provided since the onset of the pandemic.

Purchases will slow by $ 15 billion per month, which means quantitative easing should end in mid-2022, although the Fed reiterated its flexibility, saying the amount could change if necessary.

"The Fed communicated its intentions well in advance of today's meeting, so we are not seeing a 'Taper-Wantrum 2.0'," said Lawrence Gillum, fixed income strategist at LPL Financial.

Elsewhere in the market there are a number of results reports on deck for the Thursday before the opening bell. Toyota Motors, Regeneron Pharmaceuticals, and Kellogg are among the companies that will post quarterly updates. After the bell, Dropbox, Expedia, Airbnb, Shake Shake, Square and Uber, among others, will be releasing quarterly updates.

"[W] e come from a very strong quarter of earnings that took precedence over downside risks that were weighed down in the run-up to the reporting season," said Oanda's Craig Erlam. "The economy must continue to show signs of significant improvement to keep investors on board as it adjusts to a world where central banks keep interest rates extremely low," he added.

Weekly unemployment figures are published on Thursday, with economists forecasting 275,000 initial claims according to Dow Jones estimates. The number last week was 281,000, the lowest since the pandemic began.

The highly anticipated October job report will be released on Friday. According to consensus estimates, Dow Jones will create 450,000 additional jobs. The number of people employed outside agriculture rose by 194,000 in September, well below the estimate of 500,000.

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