US Stock Futures Higher After Fed Vows to Taper in November

23 Sep 2021 · 3rd Party Analysis

US Stock Futures Higher After Fed Vows to Taper in November


In Summary

  • Stock index futures advance on Thursday after reassuring comments by the Fed Chairman
  • The US central bank is expected to begin tapering as soon as November

US Stock Futures Advance After Upbeat Fed Statement

Futures on US indexes advanced early on Thursday, extending their strong performance from yesterday, following the Fed decision.

Futures contracts tied to the Dow Jones Industrial Average added more than half a percent, or over 200 points, in pre-market trading Thursday. S&P500 futures were higher by over 0.65%. Nasdaq futures moved up more than 0.6% in the early hours ahead of today’s opening bell.

Stocks snapped several days of losses yesterday after the US Federal Reserve announced it will not rush to taper immediately after its two-day September meeting. Instead, Federal Reserve Chairman Jerome Powell said Fed policymakers will consider dialing down the asset purchase program at their next meeting on Nov. 2-3.

“If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the post-meeting statement said. While no timeline was given, Chairman Powell’s indication that policymakers may taper in November was received well by the market.

Fed Chair Powell Boosts Stocks

Mr. Powell’s reassuring comments on the US economy and the progress towards the Fed’s goals assuaged investors’ fears that the vast monetary stimulus could be withdrawn as early as this month. All three benchmark indexes were propelled higher by the upbeat news from the Fed chief on Wednesday.

The 30-stock Dow Jones surged more than 500 points to its high for the day. However, it did close below it but secured a solid 1% gain or nearly 340 points. The broader S&P500 rallied nearly 1%. Both blue-chip benchmark indexes snapped four straight days of declines.

The technology-focused Nasdaq Composite sprinted 1.02%, or 150 points, led higher by big tech names. Shares of Microsoft, Amazon, and Tesla, all gained 1% or more. Netflix stock surged 3%. Overall, Fed Chair Powell struck a positive tone at the press conference. While he acknowledged the economy has progressed, he warned the labor market is still far from maximum employment. On that note, he stated the central bank will be guided by economic reports to assess market conditions that would allow for the smooth reversal of monetary policies.

Bitcoin Jumps 12% from Wednesday’s Low

While US futures hover high in positive territory, European markets today opened strongly optimistic. The Stoxx Europe 600 added about 0.8% in early Thursday deals. All European benchmark stock gauges were higher between 0.3% and 0.8%.

Bitcoin staged a 12% comeback over the last day to the current market price. Yesterday, the orange coin briefly slipped to a low of $39,500. Bitcoin bulls quickly dived in and scooped up bitcoin under $40K. Presently, the price of bitcoin floats around $44,500 per coin.

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