Stocks End Sharply Higher As Fed Signals Bond-Buying Taper Soon
4:17 pm Wednesday, September 22nd, 2021
U.S. stocks ended sharply higher on Wednesday as investors took in stride the latest signals from the Federal Reserve, including clearing the way for the central bank to reduce its monthly bond purchases soon.
Trading was choppy, however, following the Fed’s latest policy statement, in which the central bank also suggested interest rate increases may follow more quickly than expected. Overall indicators in the economy “have continued to strengthen,” the Fed said.
In addition, Evergrande concerns are reportedly waning after the company said it reached a private deal to settle one of its debt payments due Thursday. Debt-ceiling/infrastructure concerns are being pushed to the side.
Presently, all 11 S&P 500 sectors are trading higher, with six sectors up more than 1.0%. The energy sector (+3.7%) is up nearly 4.0% amid higher oil prices ($72.19/bbl, +1.70, +2.4%) and bullish inventory data out of the EIA. The communication services sector (+0.2%) underperforms with a 0.2% gain.
Facebook (FB) was exerting heavy pressure on the communication services sector after posting a cautious-sounding blog post about iOS-related headwinds. The company said it’s been underreporting ad performance by about 15% for web conversions on IOS due to privacy changes.
Adobe (ADBE) and FedEx (FDX) are two other eye sores following their earnings reports. Adobe beat EPS estimates and guided Q4 EPS/revenue above consensus, while FedEx missed EPS estimates and lowered its FY22 EPS guidance.
Longer-dated Treasury yields have edged lower from session highs despite the bullish price action in the major indices. The 10-yr yield is unchanged at 1.32% after trading at 1.34% earlier this morning. The U.S. Dollar Index is down 0.1% to 93.14. The CBOE Volatility Index is down 12.0% to 21.41.
