Wall Street strengthens, Fed announces it will end pandemic-era bond buying

Source: Reuters | Editor: Herlina Kartika Dewi

KONTAN.CO.ID – NEW YORK. Wall Street’s main indexes closed sharply higher in late trading Wednesday (15/12) after the Federal Reserve said it would end its pandemic-era bond buying or take action tapering off which marked his departure from the policies enacted at the start of the health crisis.

The Dow Jones Industrial Average rose 383.25 points, or 1.08%, to 35,927.43, the S&P 500 rose 75.76 points, or 1.63%, to 4,709.85 and the Nasdaq Composite gained 327.94 points, or 2.15% to 15,565.58.

Among the 11 S&P 500 sector indexes, the technology sector index jumped 2.7% and the healthcare sector rose 2.1%.

Apple Inc shares rose 2.85% and Nvidia Corp shares advanced 7.49%, with both lifting the S&P 500 more than any other stock.

Stock trading volume on US exchanges reached 12.2 billion shares with an average of 11.6 billion shares in the last 20 trading days.

Also Read: Wall Street drops ahead of FOMC meeting results

quote Reuters, Thursday (16/12), following a two-day policy meeting, the Fed signaled its inflation target had been met, and its announcement to end bond buying paves the way for a three-quarter percentage point increase in interest rates by the end of 2022.

All three major US stock indexes reversed earlier losses and rose into positive territory. Wall Street extended the gains as Fed Chair Jerome Powell during his press conference struck an optimistic tone about the US economic recovery and expressed a willingness to raise interest rates as needed to control inflation.

“What the market is saying is, as the Fed increases their taper, maybe they feel inflation is under control,” said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.

“They did as expected. That would add to the credibility of the Fed and it would be – on balance – neutral to positive for markets.”

The S&P 500’s sharp gains on Wednesday erased almost all of its losses from the start of the week and brought it close to a record closing high on Friday.

Inflation and higher interest rates have been a major concern on Wall Street in recent months.

Also Read: Wall Street drops, investors watch for inflation and developments in the Omicron . variant

Data on Tuesday showed producer prices increased more than expected in the 12 months to November, posting their biggest gains since 2010. Consumer price data last week showed the biggest gains in nearly four decades.

“You have hedge funds that are positioned for the worst, in terms of the worst for equities, coming to the Fed’s statement,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
“Today, I think, is a function of selling expectations and buying news.”