US close: Stocks firmer as Fed preps markets for tapering

Wall Street finished in the green on Wednesday, as the Federal Reserve indicated it was anticipating several interest rate hikes in the next three years in its latest policy decision.

At the close, the Dow Jones Industrial Average was up 1% at 34,248.32, as the S&P 500 added 0.95% to 4,395.64 and the Nasdaq Composite advanced 1.02% to 14,896.85.

The Dow closed 338.48 points points higher on Wednesday, reversing losses recorded in the prior session.

In its latest decision, the Federal Open Market Committee stood pat on the current near-zero interest rate targets, but exuded optimism around the trajectory of the Covid-19 economic recovery.

The Fed said in its statement that it could raise interest rates between six and seven times between now and the end of 2024, and added that it had progressed discussions on reducing its asset purchase programme.

“The Fed has officially implied some conviction on tapering today, ‘judging that a moderation in the pace of asset purchases may soon be warranted’,” said Validus Risk Management global capital markets associate Caleb Thibodeau.

“All signs indicate the committee is prepping markets for a tapering announcement at the upcoming November meeting.

“Powell indicated that the committee believes more than substantial progress - ‘substantial’ being the key qualifier for tapering - has been made on price stability goals, while opinions are mixed on the progress regarding maximum employment.”

Thibodeau said both goals needed to be fulfilled before tapering, which could be as soon as the next meeting.

“While still vague, Powell has now indicated a potential monetary tightening timeline, where tapering could be concluded by as early as mid-2022 and rates - on a separate schedule and criteria checklist - to potentially start taking off by the end of 2022.

“The Fed hasn’t acknowledged that inflation is now being seen in more non-transitory or less pandemic-sensitive sectors such as food or shelter prices, but they do seem to agree that inflation ‘is elevated’ and in fact, staying well above the averaging target.

“Powell indicated the labour market remains strong and on track for increased employment, though both the statement and comments made from Powell indirectly acknowledge the Delta variant for the first time and the risks to continued recovery and growth that it poses - particularly in service industries.”

Also in focus earlier was embattled Hong Kong-listed property developer China Evergrande, which has been at risk of a possible default if the firm can't get together the millions of dollars for debt payments on its US dollar-denominated bonds before the end of the week.

Investors have been fearful in recent days of a step down in global economic growth if China decelerates its property market too much or allows the real estate giant to fail.

However, sentiment got a slight boost overnight following word that Evergrande would be able to cover its interest payments on time thanks to a mainland-traded bond denominated in Chinese yuan.

On the macro front, mortgage applications in the week ended 17 September increased 4.9%, according to the Mortgage Bankers Association, up from a 0.3% increase in the previous week.

That was primarily due to a surge in refinancing activity, although purchases did also creep higher as well.

Elsewhere, existing home sales fell in August, with supply remaining constrained and prices accelerating further.

According to the National Association of Realtors, existing home sales dropped 2.0% to a seasonally adjusted annual rate of 5.88m units last month as sales fell in all four regions.

Home resales, which account for the majority of US home sales, were down 1.5% year-on-year.

In the corporate space, General Mills was up 3.29% after it beat on quarterly sales estimates, while BlackBerry rose 2.03% ahead of publishing its latest results after the close.

Dow Jones - Risers

Boeing Co. (BA) $216.98 4.06%
Chevron Corp. (CVX) $97.64 2.94%
American Express Co. (AXP) $167.49 2.58%
Goldman Sachs Group Inc. (GS) $385.47 2.56%
JP Morgan Chase & Co. (JPM) $155.91 1.92%
Apple Inc. (AAPL) $145.85 1.69%
Nike Inc. (NKE) $157.44 1.56%
Walt Disney Co. (DIS) $173.65 1.45%
Dow Chemical Co. (DOW) $56.30 1.39%
Microsoft Corp. (MSFT) $298.58 1.28%

Dow Jones - Fallers

Unitedhealth Group Inc. (UNH) $408.70 -0.88%
Amgen Inc. (AMGN) $213.64 -0.80%
Johnson & Johnson (JNJ) $163.93 -0.36%
Walmart Inc. (WMT) $142.69 -0.23%
Walgreens Boots Alliance, Inc. (WBA) $48.01 -0.02%
Dowdupont Inc. (DWDP) $30.52 0.00%
Honeywell International Inc. (HON) $230.94 0.00%
Verizon Communications Inc. (VZ) $54.06 0.06%
Merck & Co. Inc. (MRK) $72.04 0.10%
Coca-Cola Co. (KO) $54.13 0.15%

S&P 500 - Risers

Apache Corp. (APA) $20.12 7.19%
Devon Energy Corp. (DVN) $30.44 6.84%
HollyFrontier Corp (HFC) $31.92 6.26%
MGM Resorts International (MGM) $43.02 6.09%
Diamondback Energy Inc. (FANG) $84.33 5.42%
Marathon Oil Corp. (MRO) $12.02 5.35%
Hess Corp. (HES) $70.82 5.21%
Occidental Petroleum Corp. (OXY) $26.75 5.19%
ConocoPhillips (COP) $62.26 4.94%
Macy's Inc. (M) $22.63 4.77%

S&P 500 - Fallers

Raymond James Fin Corp. (RJF) $86.92 -32.54%
FedEx Corp. (FDX) $229.08 -9.12%
Incyte Corp. (INCY) $69.59 -8.51%
Facebook Inc. (FB) $343.21 -3.99%
Adobe Systems Inc. (ADBE) $626.08 -3.07%
United Parcel Service Inc. (UPS) $185.30 -2.33%
Biogen Inc (BIIB) $289.32 -2.10%
Entergy Corp. (ETR) $105.99 -1.84%
Archer-Daniels-Midland Co. (ADM) $58.99 -1.72%
Evergy, Inc. (EVRG) $62.83 -1.63%

Nasdaq 100 - Risers

Expedia Group Inc. (EXPE) $158.95 3.92%
American Airlines Group (AAL) $20.52 3.85%
Qurate Retail Inc. (QRTEA) $10.35 3.50%
Booking Holdings Inc. (BKNG) $2,406.11 3.46%
JD.com, Inc. (JD) $75.92 3.29%
Nvidia Corp. (NVDA) $219.41 3.27%
Netflix Inc. (NFLX) $590.65 3.06%
Liberty Global plc Series C (LBTYK) $28.50 2.96%
Microchip Technology Inc. (MCHP) $161.54 2.67%
Liberty Global plc Series A (LBTYA) $28.50 2.59%

Nasdaq 100 - Fallers

Incyte Corp. (INCY) $69.59 -8.51%
Facebook Inc. (FB) $343.21 -3.99%
Adobe Systems Inc. (ADBE) $626.08 -3.07%
Biogen Inc (BIIB) $289.32 -2.10%
J.B. Hunt Transport Services Inc. (JBHT) $168.51 -1.28%
Dollar Tree Inc (DLTR) $85.25 -1.17%
Vertex Pharmaceuticals Inc. (VRTX) $184.27 -0.82%
Amgen Inc. (AMGN) $213.64 -0.80%
Cerner Corp. (CERN) $72.96 -0.53%
Gilead Sciences Inc. (GILD) $71.38 -0.49%