Thursday November 4th


Stock futures are little changed as market rally pauses with major averages at records

U.S. stock index futures were flat during early morning trading on Thursday after the major averages closed at records following commentary from the Federal Reserve in the prior session. The central bank said it will begin to slow its bond-buying program, signaling that the economy can now handle an unwinding of pandemic stimulus. Investors had long anticipated the move and liked that the Fed did not signal it would be any more aggressive than necessary in raising interest rates once the bond tapering was finished next year. Futures contracts tied to the Dow Jones Industrial Average were around flat on Thursday. S&P 500 futures edged up 0.1% and Nasdaq 100 futures gained 0.3%. The S&P 500 is up 1.2% for the week, pushing the S&P 500′s year-to-date return up to 24% as the benchmark enters a seasonally strong part of the year for markets. “The Fed’s tapering announcement removes a minor, but overhanging worry across markets, as investors had been waiting for this moment for months, and it reinforces the view that the economic recovery has a long runway, albeit with a low rate of growth,” said George Ball, chairman of Sanders Morris Harris. “The Fed’s tapering announcement is a signal of economic strength, which is good for corporate earnings and markets,” he added. Qualcomm led premarket gainers on the S&P 500, rallying nearly 7% following an earnings beat propelled by a 56% surge in smartphone chip sales. The company also provide strong guidance for the fourth quarter. MGM shares gained nearly 5% after the casino operator announcing plans to sell the operations of its Mirage casino in Las Vegas to another operator. The company noted that no sales agreement had been reached and it did not mention any possible buyers. Yet Moderna shares cratered after the drugmaker slashed its Covid-19 vaccine revenue outlook. The stock was last down about 11%. And Roku was under pressure, falling more than 7% after the streaming platform reported disappointing third-quarter revenue. The central bank said it will begin to curb the pace of its monthly bond-buying program “later this month.” This marks the Fed beginning to remove the significant stimulus it’s provided since the pandemic took hold. The buying will slow by $15 billion per month, which means the quantitative easing should end by the middle of 2022, although the Fed reiterated flexibility saying the amount could change if warranted. “The Fed did a good job communicating its intentions well in advance of [Wednesday’s] meeting, which is why we aren’t seeing a ‘taper-tantrum 2.0,’” said Lawrence Gillum, fixed income strategist at LPL Financial. On the data front, U.S. jobless claims totaled 269,000 for the week ended Oct. 30, better than the 275,000 expected by economists polled by Dow Jones. October’s hotly anticipated jobs report will be released on Friday. Consensus estimates call for 450,000 jobs added, according to Dow Jones. Nonfarm payrolls increased by 194,000 in September, far short of the 500,000 estimate. Shares in Asia-Pacific rose on Thursday following the U.S. Federal Reserve’s announcement that it will start tapering the pace of its bond purchases later in November. The Nikkei 225 in Japan closed 0.93% higher at 29,794.37 while the Topix index advanced 1.18% to 2,055.56. South Korea’s Kospi also climbed 0.25% on the day to 2,983.22. In mainland China, the Shanghai composite finished the trading day 0.81% higher at about 3,526.87 while the Shenzhen component jumped 1.305% to 14,555.27. Hong Kong’s Hang Seng index was up around 0.4%, as of its final hour of trading. Markets in Singapore, Malaysia and India were closed on Thursday for a holiday. Oil prices extended declines on Thursday, pushing U.S. futures below $80 a barrel, after Iran and world powers agreed to resume nuclear talks this month that could lead to the removal of U.S. sanctions on Iranian oil, increasing global supplies. U.S. West Texas Intermediate crude slid for a third day to $79.94 a barrel by 0106 GMT, down 92 cents, or 1.1%. Brent crude futures for January fell for a second session to $81.19 a barrel, down 80 cents, or 1%. Gold prices bounced back from a three-week low on Thursday as the dollar weakened after the U.S. Federal Reserve approved plans to unwind its stimulus program this month while retaining low interest rates for some time. Spot gold was up 0.3% at $1,774.11 per ounce, as of 0106 GMT, after touching its lowest since Oct. 13 in the previous session. U.S. gold futures rose 0.7% to $1,776.80.