Wall Street closed at new record highs Wednesday after the Federal Reserve announced it would cut back on its monthly asset purchases, which supported the economy throughout the pandemic. Even with the taper, the Fed will continue to buy billions worth of Treasury and mortgage-backed securities every month. It also left interest rates unchanged near zero.
The market didn’t react with a “taper tantrum” to the news.
The Dow finished up 0.3%, or 104 points, while the S&P 500 rose 0.6%. The Nasdaq Composite climbed 1%. All three indexes notched new all-time highs.
There was no immediate taper tantrum on Wall Street following the Federal Reserve’s announcement this afternoon.
In fact, stocks ticked up slightly following the policy update, perhaps reflecting how moderate the pace of the stimulus rollback is.
The S&P 500 was up 0.1%, and the Dow was down 0.1%, or 50 points, as Fed Chairman Jerome Powell began speaking at the press conference. The Nasdaq Composite was up 0.4%.
The Federal Reserve is finally hitting the brakes on its monthly asset purchases that supported the economy throughout the pandemic.
The central bank announced Wednesday that it will reduce the pace of monthly bond buying by $10 billion for Treasury Securities and $5 billion for agency mortgage-back securities.
That means the Fed will still buy at least $70 billion Treasury securities and at least $35 billion mortgage-backed securities every month this month. Starting December, these amounts will fall to at least $60 billion and at least $30 billion, respectively. This is what’s known as tapering and was expected by investors and analysts.
NFTs, non-fungible tokens, are all the rage. But did you know that they can be used for good?
Metagood is a company doing just that, auctioning off NFTs and using the proceeds to support positive environmental and social change.
Bill Tai, who co-founded the business, said the idea started with a cat NFT that was sold for $25,000 with the proceeds going to protect oceans.
And why not? After all, NFTs are growing like “we’ve never seen anything in tech grow,” Tai said.
Travel is rebounding. That’s good news for everyone in the space, and including biometric firm Clear, which offers a touchless airport experience to get through security faster.
“Clear is about a frictionless travel experience,” said the company’s CEO Caryn Seidman-Becker, but it’s also about offering a predictable experience.
So far, Clear is available in 38 airports although it doesn’t replace TSA Precheck. The company is partnering with the TSA, though, and offers customers the ability to upload their vaccine card into their same trusted system.
“We expect biometrics to be everywhere. not just in airports but in sport stadiums, in offices…,” Seidman-Becker said.
The Federal Reserve is due for its monetary policy update this afternoon. Investors expect the central bank will finally announce a rollback of its monthly asset purchases which were used to shore up the economy during the pandemic.
But even though the Fed has been hinting at a policy change for months, it could still hurt parts of the market, according to Mark Travis, president and CEO of Intrepid Capital.
“Once liquidity starts getting removed, some of the more speculative parts of the market will feel the pain,” he said on the CNN Business digital live show Markets Now.
For example, a biotech firm that doesn’t yet generate cash and won’t do so for a few more years could really be hurt by changes in interest rates, Travis said.
The good economic news continued for the services sector, where economic activity grew at a record rate for the fourth time this year, according to the Institute for Supply Management.
The services purchasing managers’ index rose to 66.1% last month, better than the 62% economists had predicted. It was the 17th straight month of expansion for the sector.
“Demand shows no signs of slowing,” said Anthony Nieves, chair of the ISM Services Business Survey Committee.
“However, ongoing challenges — including supply chain disruptions and shortages of labor and materials — are constraining capacity and impacting overall business conditions,” he added.
US stocks were mixed at Wednesday’s opening bell, as investors are bracing for the Federal Reserve to announce a roll back of its monthly asset purchases that supported the economy through the pandemic. The Fed’s policy update is due at 2pm ET, followed by a press conference at 2:30 pm ET.
The Dow opened 0.3%, or 100 points, lower, while the S&P 500 slipped 0.1%. The Nasdaq Composite opened up 0.1%. All three indexes finished at record highs Tuesday.
In other economic news, the ADP Employment Report for October came in far better than expected, stirring some optimism for Friday’s government jobs report.
The first peek at this week’s jobs data was rather positive: The ADP Employment Report tracking private American payrolls beat economists’ predictions.
In October, 571,000 jobs were added to the economy, according to ADP. Far more than the 400,000 economists polled by Refinitiv had predicted.
The lion’s share of the hiring was done by large businesses with more than 500 employees. As for the sectors, leisure and hospitality once again came in first, hiring the most workers at 185,000. No sector lost jobs.
“The labor market showed renewed momentum last month, with a jump from the third quarter average of 385,000 monthly jobs added, marking nearly 5 million job gains this year,” said Nela Richardson, chief economist at ADP.
The ADP report comes ahead of the government’s official jobs tally for October that’s due on Friday morning. Economists predict the report will show 450,000 jobs were added last month.
Even though the ADP and BLS measures aren’t correlated, the solid report from this morning is a good omen for what’s to come.
Bed Bath & Beyond (BBBY) will sell some of its bedding, storage and baby furniture at Kroger (KR) beginning next year, the two companies announced late Tuesday.
Bed Bath & Beyond’s items will first be available on Kroger’s website for delivery in early 2022 and then in dedicated mini shops at select Kroger stores.
The retailer also said that it will start its own third-party marketplace online to expand its product assortment and would complete a three-year $1 billion stock buyback program two years ahead of schedule.
Shares are trading 55% higher in premarket trading.
Stocks are flat Wednesday after surging to records Tuesday. With strong earnings investors have been energized – and extremely greedy, according to CNN Business’ Fear & Greed Index.
But a jobs report at the end of the week and a Federal Reserve rate announcement Wednesday could change sentiment if the news isn’t what Wall Street is hoping for.
Here’s where things stand as of 6:25 am ET:
The Dow Jones Industrial Average closed above the 36,000 mark for the first time Tuesday following a gain of about 140 points, or 0.4%.
Investors had to wait only a little more than three months for the Dow to climb from its last thousand-point milestone – 35,000 – to this one. But for some, the Dow 36,000 vigil has been going on for 22 years.
Zillow (Z) is getting out of the iBuying business and will shut down its Zillow Offers division, resulting in a 25% reduction in its staff.
In its quarterly earnings report on Tuesday, the company said it will see a total write-down of more than $540 million as a result of its exit from the business, which buys homes and resells them.
As a result of shutting down Zillow Offers, the company said it will be cutting some 2,000 jobs.
Last month, the company said it was halting new purchases of homes because supply chain disruptions and the labor shortage were causing it to get backlogged on the homes it was renovating and preparing for sale.
Nearly two-thirds of Americans describe the economy as poor in a new poll that comes amid high inflation and supply chain turmoil.
The poll, released Monday by The Associated Press-NORC Center for Public Affairs Research, found just 35% of Americans now call the national economy good. That’s down from 45% in September and similar to the views in January and February, before most vaccines were widely available to most Americans.
Sixty-five percent of Americans in the poll said the economy is in poor shape.
