Stock futures are muted after Fed comments lift major averages to new highs
04 Nov 2021
U.S. stock index futures were steady during early morning trading on Thursday after the major averages closed at records following commentary from the Federal Reserve.
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.
Futures contracts tied to the Dow Jones Industrial Average were 18 points lower. S&P 500 futures and Nasdaq 100 futures hovered in positive territory.
During regular trading the Dow gained about 105 points, registering its fifth straight positive session. The 30-stock benchmark hit its 51st record intraday high of the year, and 42nd record close of 2021.
The S&P 500 also posted its fifth straight day of gains, advancing 0.65%. The index saw its 74th intraday high and 61st record close of the year.
The Nasdaq Composite gained 1.04%, and is on its longest daily winning streak since June 2020 following eight straight days of gains. The tech-heavy index saw both its 41st record high and close on Wednesday.
“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.
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 today’s meeting, which is why we aren’t seeing a ‘taper-tantrum 2.0,'” said Lawrence Gillum, fixed income strategist at LPL Financial.
Elsewhere in the market, a number of earnings reports are on deck for Thursday before the opening bell. Toyota Motors, Regeneron Pharmaceuticals and Kellogg are among the companies set to post quarterly updates. After the bell Dropbox, Expedia, Airbnb, Shake Shake, Square and Uber will post quarterly updates, among others.
“[W]e’re coming off a very strong quarter of earnings, which has taken priority over downside risk fears that had weighed in the run-up to the reporting season,” said Oanda’s Craig Erlam. “The economy will have to continue showing signs of significant improvement to keep investors on board as they adjust to a world without central banks keeping rates at extremely low levels,” he added.
On Thursday weekly jobless numbers will be released, with economists forecasting 275,000 first-time claims, according to estimates from Dow Jones. Last week’s number came in at a 281,000, the lowest since the pandemic began.
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.