Operators work on the New York Stock Exchange in New York City, USA
By Lewis Krauskopf and Devik Jain and Shashank Nayar
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(Reuters) – Major Wall Street stock indices posted solid gains and set records to close on Wednesday, when the Federal Reserve said it will begin cutting its monthly bond purchases in November with plans to end them in 2022 in ad in line with the expected by the market.
The S&P 500 and Nasdaq renewed their highs to close for the fifth consecutive session, while the Dow Jones posted a fourth record close in a row.
The S&P 500 benchmark advanced into positive territory and finished solidly higher after the announcement by the US central bank. Investors widely anticipated the decision to reduce stimuli, amid recovery from the coronavirus pandemic.
“The Fed didn’t rock the boat in this case,” said Ryan Detrick, chief market strategist at LPL Financial. “It was pretty much anticipated what the Fed could do and they did what most people expected.”
The Dow Jones Index rose 0.29% to 36,158 points, while the S&P 500 gained 0.64613% to 4,661 points. The Nasdaq technology index advanced 1.04% to 15,812 points.
Of the 11 sectors of the S&P 500, discretionary consumption <.SPLRCD > and materials gained the most, with increases of 1.8% and 1.1%, respectively. Energy lagged behind, down 0.8%.
Fed stimulus policies have been a significant support for markets, with the S&P 500 more than doubling since its March 2020 low at the start of the pandemic.
The Fed also maintained its belief that high inflation will prove “transient” and is unlikely to require a rapid rise in interest rates.
“I don’t think there’s anything unique in the statement other than the fact that they’re trying to buy time by saying that both inflation and supply chain disruptions are temporary, that’s the basic message,” said Joseph LaVorgna, chief economist for the Americas by Natixis.
At a press conference following the release of the Fed’s statement, central bank chairman Jerome Powell said it was possible that the US labor market could have improved enough by the middle of next year to achieve “full employment” an important milestone to be overcome for the BC to consider raising interest rates.
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source https://pledgetimes.com/wall-st-breaks-new-records-with-fed-avoiding-surprises-by-reducing-stimulus-istoe-money/
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