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Stock futures are slightly lower ahead of the Fed decision

Stock futures are slightly lower ahead of the Fed decision

03 Nov 2021

U.S. stock futures were muted in early morning trading on Wednesday as investors awaited a decision from the Federal Reserve on its tapering schedule.

Dow Jones Industrial Average futures dipped 37 points. S&P 500 and Nasdaq 100 futures both traded in mildly negative territory.

Lyft jumped nearly 13% in after hours trading on better-than-expected third-quarter results. Zillow fell more than 11% after announcing it will close its home buying and flipping business. Shares of Bed Bath & Beyond rose on a partnership announcement with Kroger but the nearly 70% after hours surge that followed was likely fueled by a short squeeze.

In regular trading, the Dow rose 138.79 points to 36,052.63. The S&P 500 added 0.3% and the Nasdaq Composite gained 0.3%. All three major averages closed at records for the third session in a row. The small cap Russell 2000 rose slightly and closed at an all-time high.

Investors are focused on the Federal Reserve, which is expected to announce an end to its bond-buying program on Wednesday at the conclusion of its two-day meeting. They’ll also be listening for clues on when the central bank plans to raise interest rates.

Still, equities rose Tuesday as companies continued to deliver strong earnings reports. Of the S&P 500 companies that have reported so far this earnings season, 83% of them have beat consensus expectations, according to FactSet. That’s despite ongoing supply chain disruptions, labor challenges, commodity inflation, central bank policy and Covid risk.

“Stocks are like the Energizer Bunny, as they continue to soar to new highs and show no signs of tiring,” said Ryan Detrick, chief market strategist for LPL Financial. “We understand all of the worries out there, but the bottom line is earnings continue to come in way better than expected and are helping to justify stocks are current levels.”

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Those highs are making a potential year-end rally more conceivable to investors.

“The primary market trend appears higher,” said Keith Lerner, co-chief investment officer at Truist. “In the eight periods since 1950 where stocks were up more than 20% through October, as they are this year, the S&P 500 tacked on additional gains by year end 100% of the time with an average gain of 6.2%.”

Weekly mortgage applications and ADP payrolls data are also scheduled to be released.

CVS and Marriott are scheduled to report earnings before the bell Wednesday. MGM Resorts, Etsy and Electronic Arts will report after the bell.