Wall Street Hits All-Time Highs Ahead of Fed Conference

26 Aug 2021 · 3rd Party Analysis

Wall Street Hits All-Time Highs Ahead of Fed Conference


In Summary

  • Equities on Wall Street eke out new record highs as Fed Conference kicks off today
  • Traders and investors will watch for clues around tapering monetary policy and timing rate hikes

Wall Street stocks hit all-time records on Wednesday as investors set their focus on updates from the Federal Reserve today and tomorrow. The blue-chip S&P500 and the tech-centered Nasdaq Composite ticked up to new closing records ahead of the closely watched annual central bankers meeting, the Jackson Hole symposium.

Economically sensitive stocks such as banks, energy, and industrials, were among the biggest winners yesterday as the broad-based move lifted most of the S&P500 sectors. Along with the Nasdaq Composite, both stock averages closed up by roughly 0.2% each.

The 500-stock equity gauge now has 51 closing highs for the year, propelled by the Federal Reserve’s bond-buying scheme that injects at least $120bn a month in Treasury securities and mortgage-backed securities.

The extraordinary stimulus jumpstarted the US economy during the stock market nadir in March last year when the Covid-19 crisis hit the financial markets around the globe. Since then, the stimulus program has been buoying stocks across the board, fueling the rally to regular fresh all-time records.

Market Participants Await New Insights

As stocks sit at record levels, investors are wary of this week’s central bank meeting. Federal Reserve officials are widely expected to provide new insights into a potential timeline that would highlight the pace at which the US central bank intends to cut back its monetary support.

Chairman Jerome Powell, scheduled to speak on Friday, would most likely clarify the central bank’s position toward the US economy as the final trimester of the year approaches. On the other hand, he could also choose to be rather tight-lipped and wait for the Fed’s regular meeting on Sept. 21-22 to provide more specifics around tapering or interest rate increases.

Any clues the Fed’s chair may offer would build on the already announced plans for unwinding the monthly purchases of government debt. The central bank’s meeting minutes released last week stated that many of the policymakers at the Fed have reached a consensus to start tapering this year.

Besides tapering discussions, traders and investors would look for more details around the Fed’s view on inflation. Presently, the US is going through the biggest inflation spike in decades. Consumer prices rose 5.4% in July from a year earlier.

Ahead of the meeting, stock futures hover near unchanged levels. European markets are subdued in early trading Thursday, following a rather quiet session yesterday. The Stoxx Europe 600 finished Wednesday’s session modestly higher by less than 1 point and is currently trading lower by roughly 0.2% on the day, around 470.50.

Major European benchmarks dipped into negative territory out of the gate as investors have decided to unload some risk. Stock gauges across the old continent today hover lower between 0.2% to 0.4%.

Digital assets on Thursday are experiencing jittery trading. Bitcoin slipped below $47,000 after it attempted to regain the $50,000 earlier in the day. The leading token advanced to a session high of $49,300. Buying momentum, however, was short-lived and bitcoin’s price tumbled to an intraday low of $46,700.

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