Stock market news live updates: Stocks dip as market braces for expected Fed taper

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Stocks drifted lower as Wall Street opened on Wednesday, as investors awaited a key monetary policy decision from the Federal Reserve.

A day after major benchmarks closed at record highs, blue-chip and technology shares dipped as markets braced for the central bank’s expected tapering off its monetary stimulus. On Tuesday, the Dow closed above 36,000 for the first time ever. Both indexes were buoyed by an extended run of better-than-expected corporate earnings results. 

Some of the latest names that reported results continued this winning streak. Lyft (LYFT) shares gained after the ride-hailing company posted third-quarter revenue and earnings, excluding some items, that exceeded expectations, with a recovery in drivers and ridership helping boost results. Food giant Mondelez (MDLZ) also offered third-quarter results and a full-year forecast that exceeded estimates. In other corporate developments, Bed Bath & Beyond (BBBY) announced a new partnership with Kroger and plan to accelerate its share repurchases, and the stock surged in early trading. 

Other companies, however, bucked the positive trend of stronger-than-expected earnings and guidance. Activision Blizzard (ATVI) shares sank in late trading after the video game company posted weak current-quarter guidance, and Match Group (MTCH) slid as lingering COVID-related impacts in Asia also dampened its outlook. 

Investors on Wednesday will turn their attention to the Federal Reserve’s latest monetary policy decision and press conference from Fed Chair Jerome Powell. Many market participants are expecting the Fed to formally announce the start to tapering of its crisis-era asset purchase program, which had been one of the primary tools helping to underpin the economic recovery and financial markets over the course of the pandemic. 

Currently, that asset purchase program is taking place with $120 billion worth of agency mortgage-backed securities and Treasurys per month. The Fed has previously signaled it would likely begin tapering these purchases soon and continue the process through the middle of next year.

The bigger question for market participants has now become when the Fed will begin to raise interest rates. The Fed’s latest monetary policy decision will not come with updated projections on the interest rate outlook from individual policymakers. However, at the conclusion of the Fed’s last meeting, the outlook showed a divided committee for next year, with nine members seeing no rate hikes by the end of next year while the other nine members saw at least one hike.

“The Fed is trying to separate the two and saying, listen, the fact that we start with tapering now doesn’t mean that we start hiking interest rates later on,” Willem Sels, HSBC Global Private Banking and Wealth chief investment officer, told Yahoo Finance on Tuesday. “The reason, of course, is because there is that uncertainty around the economy, around the labor market, which still has five million more people out of the job market than before the pandemic. And then also, when will inflation come down?”

“So the Fed doesn’t want to lock itself into those interest rates hikes yet,” he added. “As long as those earnings continue to do well and the Fed signals that it will be slow with those interest rate hikes, I think the market will continue to drift up, albeit with some more volatility than before.”

Still, the persistently hotter-than-expected inflationary pressures in the recovering economy have put the Fed in a difficult spot when it comes to waiting on rate hikes, many economists argued. These elevated levels of inflation might push the Fed to raise rates more quickly than previously telegraphed, some maintained. 

“The Fed’s credibility will be enhanced if Mr. Powell does not have to return to the press conference platform in December, January and March and again have to explain why inflation has risen even further,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note. “The danger has increased that the Fed will be forced into faster tapering an an insurance hike next. spring, or even a sustained inflation-chasing tightening later in the year.” 

9:30 a.m. ET: Stocks open lower as market eyes Fed

Here were the main moves in markets as of 9:35 a.m. ET:

  • S&P 500 (^GSPC): 4,627.80, -2.85 (-0.06%)

  • Dow (^DJI): 36,014.67, -37.96 (-0.11%)

  • Nasdaq (^IXIC): 15,620.03, -29.57 (-0.19%)

  • Crude (CL=F): $81.44 per barrel, -$2.47 (-2.94%)

  • Gold (GC=F): $1,769.50 per ounce, -$19.90 (-1.11%)

  • 10-year Treasury (^TNX): flat, to yield 1.5440%

8:15 a.m. ET: U.S. private payrolls topped estimates in October: ADP: 

U.S. private employers added back more jobs than expected last month, reflecting a pick-up in the pace of hiring as more service-focused companies brought back workers to meet elevated demand.

Private payrolls grew by 571,000 in October compared to September, ADP said in its closely watched monthly report. Consensus economists were looking for a rise of 400,000 jobs, according to Bloomberg data. The month earlier, private payrolls had risen by a downwardly revised 523,000, from the 568,000 previously reported.

7:16 a.m. ET Wednesday: Stock futures mixed ahead of Fed meeting 

Here’s where stocks were trading Wednesday morning ahead of the opening bell:

  • S&P 500 futures (ES=F): -4.75 points (-0.1%), to 4,618.75

  • Dow futures (YM=F): -48 points (-0.13%), to 35,890.00

  • Nasdaq futures (NQ=F): +8 points (+0.05%) to 15,969.25

  • Crude (CL=F): -$2.05 (-2.44%) to $81.86 a barrel

  • Gold (GC=F): -$4.90 (-0.27%) to $1,784.50 per ounce

  • 10-year Treasury (^TNX): -1.6 bps to yield 1.531%

6:03 p.m. ET Tuesday: Stock futures drift sideways

Here’s where markets were trading as the overnight session kicked off: 

  • S&P 500 futures (ES=F): -2.25 points (-0.05%), to 4,621.25

  • Dow futures (YM=F): -19 points (-0.05%), to 35,919.00

  • Nasdaq futures (NQ=F): -11.5 points (-0.07%) to 15,949.75

NEW YORK, NEW YORK – SEPTEMBER 30: Traders work on the floor of the New York Stock Exchange (NYSE) on September 30, 2021 in New York City. In afternoon trading the Dow was down over 250 points as investors continue to worry about inflation, wages and supply chain issues. (Photo by Spencer Platt/Getty Images)

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