US market weekly: S&P 500 ends higher amid Fed tapering and upbeat macroeconomic signals

US market weekly: S&P 500 ends higher amid Fed tapering and upbeat macroeconomic signals

Last updated: 06 Nov, 2021 | 04:56 pm

US market weekly: S&P 500 ends higher amid Fed tapering and upbeat macroeconomic signals

US indices started off the week on a higher note on Monday, as strong third-quarter earnings and global economic recovery have boosted investors confidence. Higher crude oil prices lifted shares of energy companies. All three major stock indexes ended in green.

US indices ended at record high on Tuesday for three consecutive days. This happened for the first time since December 2019. Moreover, investors are waiting for the outcome of the crucial Fed FOMC meeting that will end on Nov 3.

US stocks gained on Wednesday as investors digested a key monetary policy decision from the Federal Reserve, which included a formal announcement of the central bank's start to tapering its pandemic-era asset purchases. 

U.S. stock markets closed mixed on Thursday as market participants were busy analyzing the post FOMC statement of the Fed Chairman. The central bank has decided to start pulling back its stimulus effective this month. 

US indices rose on Friday, with major benchmarks rallying to fresh records as investors reacted favorably to October jobs report, which showed a better-than-expected pick-up in payroll growth and another improvement in the unemployment rate. For the week, S&P 500 ended 2% higher and Dow Jones 1.4% higher. 

Weekly market stats with IND

Let’s see the major developments during the week:

Fed announces taper: At Wednesday’s conclusion of the Fed’s policy meeting, the central bank stated that it will begin to slow its monthly bond purchases by USD 15 billion later this month and in December. By not specifying the speed of the taper beyond December, it gives Fed the flexibility to make adjustments as economic conditions evolve.

The policy statement released after the meeting and Fed Chairman Jerome Powell’s post-meeting press conference stressed that policymakers still expect the recent high inflation readings to moderate and will need to see further labor market improvement before raising rates, helping to alleviate fears about an abrupt monetary policy tightening. This seemed to put a dovish spin on the tapering announcement for stock investors, who drove equities higher following the Fed meeting.

Macroeconomics signals: Economic data released during the week showed that the economy gained strength as the wave of the delta variant eased. Factory orders increased 0.2% in September, slightly more than consensus expectations. The government’s October employment report, released on Friday morning, showed 531,000 jobs added, topping consensus estimates. The unemployment rate fell to 4.6%. The Labor Department also said that the economy gained 235,000 more jobs in August and September than it originally estimated.

Delta variant remains a concern: The spread of the delta variant appears to have gradually slowed down as economic progress is coming back on track.  An average of roughly around 70k coronavirus cases have been reported each day in the United States while the total cases have crossed the 46.2 million mark. However, to battle this, the pace of vaccination has also picked up. About 58.3% of the eligible American population (age 12 and over) are fully vaccinated and over 67.6% have received the first dose.

Oil prices drop: Oil prices dropped from their recent highs after Biden administration officials mentioned the possibility of releasing supply from the strategic petroleum reserve. OPEC+, will rollover its August program to gradually increase oil production by 400,000 barrels per day each month. The oil benchmark reduced 2.5% in the week to close at $81.5/ barrel.

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