Stock Futures Hold Gains After Fed Decision

Equity futures opened slightly higher on Wednesday night as investors reflected on the Federal Reserve’s latest monetary policy signals, suggesting the central bank braced for a near-term policy adjustment as the economy improved further.

S&P 500 contracts won. Earlier, the blue chip index rose for the first time in five sessions and made up for some of its large losses since the start of this week. The index is still on track to post a weekly decline of nearly 1%, however, to extend a streak of sales into September.

The Federal Reserve’s optimistic tone on the economic recovery, and the suggestion that the timing of the process of reducing its asset purchase program would be broadly in line with market expectations, helped maintain a rally in risky assets during the Wednesday’s session. Fed Chairman Jerome Powell reiterated that he believes the US economy has already exceeded central bank inflation targets, and said a “reasonably good” September jobs report would indicate that the Fed’s employment targets to start declining had also been met.

More members of the Federal Open Market Committee have also put forward their expectations of when interest rates will be raised from their current levels near zero, with exactly half of FOMC members now projecting at least a first hike of by the end of 2022.

“The reaction from the market and investors was really an understanding and a belief that ultimately rising interest rates suggest there is a strong economy,” James Bruderman told Yahoo Finance Live on Wednesday. , vice-president of 1879 Advisors.

“This does not mean that long term interest rates will rise overnight, but I certainly think there is a risk of bonds falling from these levels for the foreseeable future,” he said. he adds. “I think from an economic standpoint stocks continue to be about to do very well. I mean, we’re not going to see the GDP growth we’ve seen so far, but we see no reason why 3%, 2.5% GDP growth over the next three or four years cannot be sustained, and we think that is very powerful for stocks. ”

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And for the Fed’s closely watched tapering process, Powell laid the groundwork to start shrinking as early as November, and said the process could be completed by “the middle of next year.” Although the markets have been nervous about the start of the decline for months, it is ultimately “likely to have minimal impact on the market at this point,” said Rick Rieder, BlackRock’s chief investment officer for income securities. global landlines.

“This is in part because the Fed has done a decent job of telegraphing when tapering is likely to begin (most market participants believe the announcement will come this year),” Rieder said in a note Wednesday night. . “But more importantly, is because the asset purchase cuts are likely to be insignificant in the context of the current size of fixed income markets and the overwhelming demand for income.”

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6:11 p.m. ET Wednesday: Stock futures trading slightly higher after Fed move

Here are the main movements on the markets on Wednesday evening:

• S&P 500 Futures Contracts (ES = F): +3.25 points (+ 0.07%), at 4,387.25

• Dow Futures (YM = F): +40 points (+ 0.12%), at 34,169.00

• Nasdaq Futures (NQ = F): +16.25 points (+ 0.11%) to 15,179.75

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter