US stocks hit new highs again amid positive Fed reaction
(RTTNews) – Stocks were mostly higher on Wednesday’s trading day as traders responded positively to the Federal Reserve’s monetary policy announcement. As the upward movement continued, major averages once again hit new closing highs.
The major averages all closed in positive territory after a strong bullish movement towards the end of the session. The Dow Jones rose 104.95 points or 0.3% to 36,157.58, the Nasdaq jumped 161.98 points or 1% to 15,811.58 and the S&P 500 climbed 29.92 points or 0.7% at 4,660.57.
Wall Street’s end-of-day advance came after the Fed announced its widely-awaited decision to start cutting back on asset purchases later this month.
The Fed said it plans to cut its $ 120 billion in monthly bond purchases to $ 15 billion per month, citing the economy’s substantial progress towards its targets for maximum employment and stability of workers. price.
After cutting asset purchases by $ 15 per month this month and next, the Fed expects similar reductions in the pace of net asset purchases to be likely appropriate each month, but said that it was prepared to adjust the pace of purchasing if changes in the economic outlook warrant it. .
The accompanying statement continuing to describe high inflation as “transient” along with comments from Fed Chairman Jerome Powell seemed to allay fears that the central bank was in a hurry to start raising interest rates.
In his post-meeting press conference, Powell stressed that the decision to start phasing out asset purchases does not reflect a direct signal regarding interest rate policy.
“We continue to articulate a different and stricter test for the economic conditions that should be met before raising the federal funds rate,” Powell said.
Powell argued that there is still some way to go to achieve maximum employment both in terms of employment and participation.
Earlier today, payroll processor ADP released a report showing that private sector employment in the United States grew more than expected in October.
The ADP said private sector employment jumped by 571,000 jobs in October after increasing by 523,000 revised jobs in September.
Economists expected private sector employment to increase by 400,000 from the 568,000 addition initially reported for the previous month.
The Labor Department is expected to release its more closely watched monthly employment report on Friday, which includes both public and private sector jobs.
Economists currently expect employment to jump by 425,000 jobs in October after increasing 194,000 jobs in September, while the unemployment rate is expected to drop to 4.7% from 4.8%.
A separate report released by the Institute for Supply Management showed that growth in US service sector activity accelerated to a new high in October.
The ISM said its services PMI climbed to 66.7 in October from 61.9 in September, with a reading above 50 indicating growth in the sector. Economists expected the index to climb to 62.0.
Networks stocks continued the rally seen in the previous session, as the NYSE Arca Networking Index climbed 1.8% to a new closing high.
Significant strength was also visible among tobacco stocks, as evidenced by the 1.7% gain posted by the NYSE Arca Tobacco Index.
Retail stocks also performed strongly that day, pushing the Dow Jones US Retail Index up 1.5% to a record closing high.
Financials, chemicals and software stocks also saw notable strength, while oil, transportation and computer hardware stocks fell.
In overseas trading, stock markets in the Asia-Pacific region posted a mixed performance, with Japanese markets closed for a holiday. The Shanghai Chinese Composite Index was down 0.2%, while the Australian S & P / ASX 200 index was up 0.9%.
The main European markets also ended the day in a mixed bag. While the UK FTSE 100 index fell 0.4%, the German DAX index closed just above the line unchanged and the French CAC 40 index rose 0.3%.
In the bond market, Treasuries closed in negative territory following the Fed’s announcement. Subsequently, the yield of the ten-year benchmark bond, which moves opposite its price, increased 3 basis points to 1.579%.
Reports on weekly jobless claims, the trade deficit and labor productivity could draw attention on Thursday, although traders may look to the more closely watched monthly employment report on Friday.
A number of well-known companies are also expected to release their quarterly results after the market closes today and before the market starts on Thursday.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.