Nov 3, 2021
U.S. stocks hit record, bond curve steepens after Powell's remarks
We're looking at elevated inflation for the remainder of this decade: Strategas’ Thomas Tzitzouris
Stocks climbed to a record after the Federal Reserve signaled monetary policy will remain accommodative even as the central bank starts reducing its massive bond-buying program this month.
In a feat not seen since January 2018, the S&P 500, the Dow Jones Industrial Average, the Nasdaq 100 and the Russell 2000 rallied to their all-time highs in sync for a second straight day. The Treasury curve steepened after Fed Chair Jerome Powell sought to stress that tapering doesn’t mean rate hikes are coming soon. He said officials can be patient on tightening, but won’t flinch from action if warranted by inflation.
“Powell was very careful not to make any missteps today, sticking carefully to his script that their focus is on tapering, not raising rates,” wrote Seema Shah, chief strategist at Principal Global Investors. “That’s a shame, because interest-rate hikes are all that markets want to talk about!”
Traders largely maintained bets on the timing of rate increases from the level they were at before the Fed decision. Money-market derivatives show about 55 basis points of rate hikes by the end of 2022. The first one is seen coming around July, with about a 70 per cent chance it happens the month before, overnight index swaps show.
After the close of regular trading:
- Qualcomm Inc., the world’s largest smartphone chipmaker, gave a stronger-than-expected outlook for the current quarter.
- Booking Holdings Inc. reported gross bookings that beat analysts’ forecasts as an increase in Covid-19 vaccination rates in some markets helped spur a travel rebound before the delta variant set in.
- Video-streaming platform Roku Inc. reported quarterly results that missed expectations on key metrics.
- Electronic Arts Inc. gave a forecast for revenue in its fiscal third-quarter that was broadly in line with estimates, suggesting that a new Battlefield game due out this month will perform better than early reviews portend.
- The Treasury announced the first reduction in its quarterly sale of longer-term debt in more than five years, reflecting diminishing borrowing needs as the wave of pandemic-relief spending ebbs.
U.S. companies added the most jobs in four months, suggesting employers are making progress in filling a near-record number of open positions. The data precede Friday’s monthly employment report from the Labor Department. Service providers expanded at a record pace in October, powered by resilient demand and stronger business activity.
Some of the main moves in markets:
- The S&P 500 rose 0.6 per cent as of 4 p.m. New York time
- The Nasdaq 100 rose 1.1 per cent
- The Dow Jones Industrial Average rose 0.3 per cent
- The MSCI World index rose 0.5 per cent
- The Bloomberg Dollar Spot Index fell 0.3 per cent
- The euro rose 0.2 per cent to US$1.1605
- The British pound rose 0.5 per cent to US$1.3680
- The Japanese yen was little changed at 114.01 per dollar
- The yield on 10-year Treasuries advanced four basis points to 1.59 per cent
- Germany’s 10-year yield was little changed at -0.17 per cent
- Britain’s 10-year yield advanced four basis points to 1.07 per cent
- West Texas Intermediate crude fell 4.9 per cent to US$79.82 a barrel
- Gold futures fell 0.9 per cent to US$1,772.70 an ounce