The S&P 500 rose for a sixth day in a row on Thursday after the equity benchmark closed at a record following commentary from the Federal Reserve in the prior session.
The central bank said it will begin to slow its bond-buying program, signaling that the economy can now handle an unwinding of pandemic stimulus. Investors had long anticipated the move and liked that the Fed did not signal it would be any more aggressive than necessary in raising interest rates once the bond tapering was finished next year.
Futures contracts tied to the Dow Jones Industrial Average were around flat on Thursday. S&P 500 futures edged up 0.1% and Nasdaq 100 futures gained 0.3%.
The S&P 500 is up 1.2% for the week, pushing the S&P 500’s year-to-date return up to 24% as the benchmark enters a seasonally strong part of the year for markets.
“The Fed’s tapering announcement removes a minor, but overhanging worry across markets, as investors had been waiting for this moment for months, and it reinforces the view that the economic recovery has a long runway, albeit with a low rate of growth,” said George Ball, chairman of Sanders Morris Harris.
“The Fed’s tapering announcement is a signal of economic strength, which is good for corporate earnings and markets,” he added.
Qualcomm led premarket gainers on the S&P 500, rallying nearly 7% following an earnings beat propelled by a 56% surge in smartphone chip sales. The company also provide strong guidance for the fourth quarter.
MGM shares gained nearly 5% after the casino operator announcing plans to sell the operations of its Mirage casino in Las Vegas to another operator. The company noted that no sales agreement had been reached and it did not mention any possible buyers.
Yet Moderna shares cratered after the drugmaker slashed its Covid-19 vaccine revenue outlook. The sotck was last down about 11%
And Roku was under pressure, falling more than 7% after the streaming platform reported disappointing third-quarter revenue.
The central bank said it will begin to curb the pace of its monthly bond-buying program “later this month.” This marks the Fed beginning to remove the significant stimulus it’s provided since the pandemic took hold.
The buying will slow by $15 billion per month, which means the quantitative easing should end by the middle of 2022, although the Fed reiterated flexibility saying the amount could change if warranted.
“The Fed did a good job communicating its intentions well in advance of [Wednesday’s] meeting, which is why we aren’t seeing a ‘taper-tantrum 2.0,'” said Lawrence Gillum, fixed income strategist at LPL Financial.
On the data front, U.S. jobless claims totaled 269,000 for the week ended Oct. 30, the lowest pandemic-era total and better than the 275,000 expected by economists polled by Dow Jones.
October’s hotly anticipated jobs report will be released on Friday. Consensus estimates call for 450,000 jobs added, according to Dow Jones. Nonfarm payrolls increased by 194,000 in September, far short of the 500,000 estimate.