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Wall Street closed higher on Wednesday as market participants welcome the Fed’s FOMC policy decisions. U.S. stock markets maintained their northbound journey with all three major stock indexes closed at record-high levels for four consecutive days. This happened for the first time since Oct 5, 2017. Moreover, several strong economic data also boosted investors’ confidence.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3% or 104.95 points to close at 36,157.58, marking its all-time closing high. In intraday trading, the blue-chip index recorded a fresh all-time high of 36,178.51. Notably, 22 components of the 30-stock index ended in the green while 8 in red.
The tech-heavy Nasdaq Composite finished at 15,811.58, gaining 1% or 161.98 points due to strong performance by large-cap technology stocks. This marked the tech-laden index’s new closing high. In intraday trading, the index recorded a fresh all-time high of 15,821.58.
Meanwhile, the S&P 500 advanced 0.7% to end at 4,660.57. marking the broad-market index’s new closing high. In intraday trading, the index registered a fresh all-time high of 4,663.46. Eight out of eleven sectors of the benchmark index closed in positive territory and three in red. The Materials Select Sector SPDR (XLB) and the Consumer Discretionary Select Sector SPDR (XLY) increased 1% and 1.8%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 5.8% to 15.10. A total of 11 billion shares were traded on Wednesday, lower than the last 20-session average of 10.3 billion. Advancers outnumbered decliners on the NYSE by a 2.01-to-1 ratio. On Nasdaq, a 2.11-to-1 ratio favored advancing issues.
Fed Remains Dovish Despite Tapering
On Nov 3, the Fed Chairman Jerome Powell said in his post-FOMC meeting statement that the central bank will start reducing its existing $120 billion per month bond-buy program ($80 billion Treasury Note and $40 billion mortgage-backed securities) effective this month.
The Fed has decided to reduce its existing bond-buy program by $15 billion per month ($10 billion Treasury Note and $5 billion mortgage-backed securities) later this month. At this rate, the quantitative easing program will terminate in June 2022. The gradual elimination of the monetary stimulus is a calculated move by the central bank to avoid a 2013 like taper tantrum.
Having initiated the tapering, the Fed chair said “Our decision today to begin tapering our asset purchases does not imply any direct signal regarding our interest rate policy. We continue to articulate a different and more stringent test for the economic conditions that would need to be met before raising the federal funds rate.”
In this regard, Powell only slightly adjusted the Fed’s view on inflation from “transitory” to “expected to be transitory.” This clearly implies that the central bank is in no hurry to hike the benchmark interest rate from the current range of 0-0.25%. He also said that the Fed is ready to adjust the pace of tapering “if warranted by changes in the economic outlook.”
Economic Data
Automatic Data Processing Inc. (ADP - Free Report) reported that private payrolls increased 571,000 in October beating the consensus estimate of 395,000. September’s data was revised downward to 523,000 from 568,000 reported earlier. Automatic Data Processing carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factory orders for the month of September increased 0.2% compared with the consensus estimate of a break-even. August’s data was revised downward to 1% from 1.2%.
The Institute of Supply Management reported that its services index for the month of October jumped to a record-high 66.7 beating the consensus estimate of 62. September’s reading was 61.9. Notably, any reading above 50 means expansion in services activities and a reading above 60 generally indicates exceptional result.
The IHS Markit reported that the final reading of its services PMI for the month of October came in at 58.7 beating the preliminary reading of 58.2. September’s reading was 54.9.
For the week ended Oct 29, U.S. commercial crude oil inventories increased by 3.3 million barrels from the previous week.
Marathon Oil Corp. (MRO - Free Report) reported third-quarter 2021 adjusted net income per share of $0.39, beating the Zacks Consensus Estimate of $0.31. (Read More)
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Stock Market News for Nov 4, 2021
Wall Street closed higher on Wednesday as market participants welcome the Fed’s FOMC policy decisions. U.S. stock markets maintained their northbound journey with all three major stock indexes closed at record-high levels for four consecutive days. This happened for the first time since Oct 5, 2017. Moreover, several strong economic data also boosted investors’ confidence.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3% or 104.95 points to close at 36,157.58, marking its all-time closing high. In intraday trading, the blue-chip index recorded a fresh all-time high of 36,178.51. Notably, 22 components of the 30-stock index ended in the green while 8 in red.
The tech-heavy Nasdaq Composite finished at 15,811.58, gaining 1% or 161.98 points due to strong performance by large-cap technology stocks. This marked the tech-laden index’s new closing high. In intraday trading, the index recorded a fresh all-time high of 15,821.58.
Meanwhile, the S&P 500 advanced 0.7% to end at 4,660.57. marking the broad-market index’s new closing high. In intraday trading, the index registered a fresh all-time high of 4,663.46. Eight out of eleven sectors of the benchmark index closed in positive territory and three in red. The Materials Select Sector SPDR (XLB) and the Consumer Discretionary Select Sector SPDR (XLY) increased 1% and 1.8%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 5.8% to 15.10. A total of 11 billion shares were traded on Wednesday, lower than the last 20-session average of 10.3 billion. Advancers outnumbered decliners on the NYSE by a 2.01-to-1 ratio. On Nasdaq, a 2.11-to-1 ratio favored advancing issues.
Fed Remains Dovish Despite Tapering
On Nov 3, the Fed Chairman Jerome Powell said in his post-FOMC meeting statement that the central bank will start reducing its existing $120 billion per month bond-buy program ($80 billion Treasury Note and $40 billion mortgage-backed securities) effective this month.
The Fed has decided to reduce its existing bond-buy program by $15 billion per month ($10 billion Treasury Note and $5 billion mortgage-backed securities) later this month. At this rate, the quantitative easing program will terminate in June 2022. The gradual elimination of the monetary stimulus is a calculated move by the central bank to avoid a 2013 like taper tantrum.
Having initiated the tapering, the Fed chair said “Our decision today to begin tapering our asset purchases does not imply any direct signal regarding our interest rate policy. We continue to articulate a different and more stringent test for the economic conditions that would need to be met before raising the federal funds rate.”
In this regard, Powell only slightly adjusted the Fed’s view on inflation from “transitory” to “expected to be transitory.” This clearly implies that the central bank is in no hurry to hike the benchmark interest rate from the current range of 0-0.25%. He also said that the Fed is ready to adjust the pace of tapering “if warranted by changes in the economic outlook.”
Economic Data
Automatic Data Processing Inc. (ADP - Free Report) reported that private payrolls increased 571,000 in October beating the consensus estimate of 395,000. September’s data was revised downward to 523,000 from 568,000 reported earlier. Automatic Data Processing carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factory orders for the month of September increased 0.2% compared with the consensus estimate of a break-even. August’s data was revised downward to 1% from 1.2%.
The Institute of Supply Management reported that its services index for the month of October jumped to a record-high 66.7 beating the consensus estimate of 62. September’s reading was 61.9. Notably, any reading above 50 means expansion in services activities and a reading above 60 generally indicates exceptional result.
The IHS Markit reported that the final reading of its services PMI for the month of October came in at 58.7 beating the preliminary reading of 58.2. September’s reading was 54.9.
For the week ended Oct 29, U.S. commercial crude oil inventories increased by 3.3 million barrels from the previous week.
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APA Q3 Earnings Beat Estimates on Production and Price Gains
APA Corp. (APA - Free Report) reported third-quarter 2021 earnings per share — excluding one-time items — of $0.98, beating the Zacks Consensus Estimate of $0.89. (Read More)
Marathon Oil Q3 Earnings Beat, Strong Prices Favor
Marathon Oil Corp. (MRO - Free Report) reported third-quarter 2021 adjusted net income per share of $0.39, beating the Zacks Consensus Estimate of $0.31. (Read More)