Wall Street will rise as Fed wages war on inflation


Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA on November 29, 2021. REUTERS / Brendan McDermid

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  • Fed ends bond purchases, signals rate hikes in 2022
  • Big tech stocks, banks lead early gains
  • Lennar slips due to a lack of quarterly profit
  • Futures up: Dow 0.62%, S&P 0.64%, Nasdaq 0.52%

Dec 16 (Reuters) – Wall Street major indices were set to rise on Thursday after the Federal Reserve announced a faster release of its pandemic-era stimulus, which eased some nerves amid mounting price pressures.

The US Federal Reserve announced on Wednesday that it would end its bond purchases in March and announced a rate hike of three quarter percentage points by the end of 2022. read more

Federal Reserve chairman Jerome Powell said the US economy no longer needed increasing political support as annual inflation has been more than double the central bank target for the past few months as the economy nears full employment .

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“Is the ‘Santa Rally’ finally here? Markets certainly seem to have gotten off to a good start … the prospect of three rate hikes in 2022 would suggest that the central bank has a clear plan not to let inflation get out of hand. “Wrote Russ Mold, Investment Director at AJ Bell, in a client note.

“Plus, rocking the economy isn’t too aggressive. That balance is exactly what investors want, and an optimistic tone from the Fed certainly seems to have rubbed off on the markets.”

Recent readings on rising producer and consumer prices as well as the rapidly spreading Omicron variant of the coronavirus have stoked fear, but with most of the biggest market-moving events for the past year, the benchmark S&P 500 (.SPX) moved closer to a record high.

“I’d say a sprint to the finish is probably what this market should expect,” said Art Hogan, chief market strategist at National Securities in New York.

“There’s a really good chance a lot of the turmoil in both November and December is now in the rearview mirror and the markets may now slide higher.”

Big tech stocks and banks led the profits in pre-trading. The shares of Tesla Inc (TSLA.O), Microsoft Corp (MSFT.O), Apple Inc (AAPL.O), Meta Platforms Inc (FB.O), and Amazon.com Inc (AMZN.O) rose between 0.2 % and 1.5%.

Bank stocks like JPMorgan Chase & Co (JPM.N), Morgan Stanley (MS.N), Bank of America (BAC.N), Wells Fargo and Citigroup (CN) gained between 1.4% and 1.7%.

At 8:33 a.m. ET, the Dow E-Minis were up 224 points, or 0.62%, the S&P 500 E-Minis were up 30.25 points, or 0.64%, and the Nasdaq 100 E-Minis were up 85.25 points, or 0.52 %.

The data showed that the number of Americans filing new unemployment benefits rose moderately last week and remained at levels consistent with tightening labor market conditions. Continue reading

Lennar Corp (LEN.N) fell 4.9% after the home builder missed analysts’ estimates for quarterly earnings as pandemic supply chain issues soared wood costs and delayed home deliveries.

Data company IHS Markit is expected to release manufacturing, services and composite PMI surveys later this day for December.

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Reporting by Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty and Maju Samuel

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