Stocks Soar After Early Fall; Fed To End Bond Purchases In March
5:07 pm Wednesday, December 15th, 2021
Wall Street ended sharply higher on Wednesday after the Federal Reserve said it would end its pandemic-era bond purchases in March as it exits from policies enacted at the start of the health crisis.
Following its two-day policy meeting, the Fed signaled its inflation target has been met, and its announcement on ending the bond purchases paved the way for three quarter-percentage-point interest rate increases by the end of 2022.
A relatively disappointing retail sales report for November has contributed to the lack of buying conviction, although the data has supported the view that consumers may have simply moved up their holiday shopping amid supply shortages highlighted in the media.
Specifically, total retail sales increased just 0.3% m/m in November (consensus +0.8%), as did retail sales, excluding autos (consensus +0.9%). Both figures increased by an upwardly revised 1.8% (from 1.7%) in October.
As for the Fed, the market is expecting the FOMC to keep the target range for the fed funds rate near zero and announce a more aggressive tapering plan. Investors will scrutinize the Fed’s dot plot to see if the median projection signals three rate hikes next year instead of two, which could unnerve the market.
In corporate news, Eli Lilly (LLY) was rallying 9.5% after issuing upbeat FY21 and FY22 EPS guidance. Lowe’s (LOW) and Nucor (NUE) issued downbeat guidance, but LOW shares have recouped early losses and now trade higher.
Total retail sales were up 0.3% month-over-month (consensus +0.8%) as were retail sales, excluding autos (consensus +0.9%). On a year-over-year basis, total retail sales were up 18.2% and up 19.5% excluding autos.
