Wall Street Close: Stock benchmarks gain around 1.0% each even as Fed’s Powell flag taper
|- US equity bulls ignore Fed’s tapering hints amid mixed details.
- Downbeat Treasury yields, Evergrande news favor the up-moves.
- FedEx slumps on downbeat earnings forecast, Toast cheers NYSE debut.
US shares end the key Wednesday surprisingly on a positive side, despite the Federal Reserve’s (Fed) hint for tapering. The market’s reaction to the Fed announcements was initially bearish and favored the equities, which kept the gains even as Chairman Jerome Powell turned up as hawkish and supported the consolidation of the asset purchase from the next month.
Read: Forex Today: Powell boosts the greenback
The US central bank matches market expectations of keeping the Fed rate unchanged at 0.25% but the policymakers are divided over the rate hike, now expecting a start from either 2022 or 2023 versus the previous support for 2023. The same hints at the hawkish view of the policymakers.
However, the equities remained firmer as markets seem to have taken the Fed view with a pinch of salt because the rate hikes aren’t imminent following the end of the taper.
In addition to the Fed’s mixed clues, despite clear hints on tapering, China Communist Party’s (CCP) deal with Evergrande to avoid default and safeguard the monetary system follows the People’s Bank of China’s (PBOC) heavy liquidity injection favored the market sentiment.
Against this backdrop, all three equity benchmarks closed around 1.0% higher on Wednesday with the Nasdaq gaining the most of 1.02% while cheering two basis points (bps) of a decline by the US 10-year Treasury yields.
It should be noted that the US Dollar Index (DXY) ends Wednesday on a firmer note with the heaviest daily gains in a week.
Talking about stocks, FedEx became the worst performer on S&P 500 after cutting fiscal 2022 earnings projections. On the contrary, Toast began the NYSE trading with the first-day gains of over 56%.
Moving on, the preliminary readings of the US Markit PMIs for September may entertain investors looking forward while heading from China will also be the key to follow.
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