Stocks traded mixed on Thursday, with tech stocks and the broader market setting new highs as investors digested the Federal Reserve's decision to begin paring back some of its monetary policy support as the economic recovery progressed.
Although the Dow dropped, tech stocks were boosted by Tesla, which set a new record high above $1200 per share, and helped the Nasdaq set a fresh record. The S&P 500 also eked out a new high.
A day earlier, all of the major benchmarks set records, with the Fed's latest monetary policy decision compounding with optimism over a slew of stronger-than-expected quarterly corporate earnings results.
The Fed's decision on Wednesday unfolded the way many investors had been expecting, wherein the central bank formally announced it would begin tapering its pandemic-era asset purchase program starting this month. That came as Federal Open Market Committee members deemed that the economy had made "substantial further progress" in recovering to warrant the gradual removal of this policy support.
But importantly, the newly announced contours of the Fed's tapering plan appeared to appease equity traders.
"The Fed has baked in some flexibility in their tapering," Ryan Nauman, Zephyr market strategist, told Yahoo Finance Live on Wednesday. "They were very clear that in November and December how much they were going to taper. After that, they did not put in a dollar amount on it."
Specifically, the Fed said it would begin reducing its asset purchases this month by a total of $15 billion, and then by another $15 billion in December, but said the outlook for the pace of tapering in the future would depend on "changes in the economic outlook." Fed Chair Jerome Powell also reiterated his prior stance that the ultimate end of the tapering process next year would not automatically signal the start to interest rate hikes.
"So they added some flexibility, and a lot of it has to do with the uncertainty around inflation," Nauman added. "And even though they said inflation is transitory, they added that word 'expected,' which kind of hedges their bets a little bit and buys them some more flexibility. And finally I think that [last] piece ... is the timeline. They added more transparency, more clarity to the timeline and the markets really liked that ... that transparency showing that they're expecting inflation to start slowing during mid-2022, Q2, Q3."
Separately Wednesday afternoon, third-quarter earnings season rolled on with a parade of names across industries reporting results. Booking Holdings (BKNG) share rose after third-quarter results pointed to a pick-up in travel trends especially in Europe, with revenue jumping 77% over last year to top Wall Street's estimates. Semiconductor company Qualcomm (QCOM) also posted better-than-expected quarterly earnings, revenue and guidance, suggesting strong demand was buoying the company despite a global chip shortage and supply chain snarls. Etsy (ETSY), on the other hand, offered a lower-than-expected forecast for the holiday shopping season, with the e-commerce site losing some momentum after a surge in online sales over the course of the pandemic.
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4:05 p.m. ET: S&P 500 closes at a record high for sixth straight session, powered by jump in tech stocks
Here were the main moves in markets as of 4:05 p.m. ET:
Gold (GC=F): +$30.90 (+1.75%) to $1,794.80 per ounce
10-year Treasury (^TNX): -5.5 bps to yield 1.5240%
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11:33 a.m. ET: Small cap and technology stocks could be some of the winners going forward: CIO
Select areas of the market are poised to benefit as the Federal Reserve remains accommodative in its monetary policy posturing and the economic recovery moves along, and those could include small-cap and technology stocks, according to one strategist.
"We are seeing momentum right now both in small cap stocks ... and technology stocks," Kevin Mahn, Hennion & Walsh Asset Management president and chief investment officer, told Yahoo Finance Live on Thursday. "And we believe that as we move further and further away from the COVID-19 pandemic and more of the economy starts to open, technology will become an even more critical component of that reopening in areas such as ... artificial intelligence, robotics, the internet of things, fintech, and even 5G. as we try and expand our country's broadband access."
"So we see more upside potential for small-cap stocks as the economy continues to expand, and as credit conditions remain accommodative, but particularly in those areas of revolutionary technologies."
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10:00 a.m. ET: U.S. trade deficit hits new high
The Commerce Department said U.S. the trade gap surged 11.2% to a record $80.9 billion in September. Exports tumbled 3.0% to $207.6 billion in September. Goods exports plunged 4.7% to $142.7 billion. The decline was led by industrial supplies, with crude oil exports decreasing $1.0 billion. Imports rose 0.6% to a record $288.5 billion. Goods imports rose 0.8% to $240.9 billion, also a record high.
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9:30 a.m ET: Stocks mixed at the open
Here were the main moves in markets as of 9:30 a.m. ET:
8:36 a.m. ET: New jobless claims set fresh pandemic-era low, coming in below 300,000 for fourth straight week
New weekly jobless claims came at a fresh pandemic-era low, with further improvements in the labor market coming as companies continue to compete to attract and retain workers amid elevated demand.
Initial unemployment claims came in at 269,000 for the week ended Oct. 30, or the lowest since March 2020. This came following the prior week's total of 283,000 new claims, with that sum upwardly revised from the 281,000 reported previously. Consensus economists were looking for 275,000 new claims for last week, according to Bloomberg consensus data.
Continuing claims for regular state programs also fell more than expected to reach their best level since the start of the pandemic. These were at 2.105 million for the week ended Oct. 23, compared to the 2.150 million expected and 2.239 million from the prior week.
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7:47 a.m. ET Thursday: Stock futures mixed after Fed decision, tech stocks outperform
Here's where markets were trading Thursday morning:
S&P 500 futures (ES=F): +7 points (+0.15%), to 4,659.25
Dow futures (YM=F): -5 points (-0.01%), to 36,030.00
Nasdaq futures (NQ=F): +62 points (+0.38%) to 16,191.75
6:07 p.m. ET Wednesday: Stock futures drift sideways
Here's where markets were trading as the overnight session kicked off:
S&P 500 futures (ES=F): +1.25 points (+0.03%), to 4,653.50
Dow futures (YM=F): -1 points (-0.00%), to 36,034.00
Nasdaq futures (NQ=F): +8 points (+0.05%) to 16,137.75
NEW YORK, NEW YORK - SEPTEMBER 30: Traders work on the floor of the New York Stock Exchange (NYSE) on September 30, 2021 in New York City. In afternoon trading the Dow was down over 250 points as investors continue to worry about inflation, wages and supply chain issues. (Photo by Spencer Platt/Getty Images) ·Spencer Platt via Getty Images
