Fed Taper Fails To Stem Wall Street Surge

Major Wall Street indexes posted solid gains and marked closing record highs as the Federal Reserve said it will begin trimming its monthly bond purchases in November with plans to end them in 2022, an announcement that investors had been expecting.

The S&P 500 and Nasdaq notched record all-time closes for their fifth straight sessions, while the Dow Jones Industrial Average posted a record close for the fourth session in a row.

The benchmark S&P 500 advanced into positive territory and ended solidly higher after the US central bank announced plans to begin tapering its bond purchases. Investors had widely anticipated the decision as the Fed pulls back on its monetary support with the economy recovering from the coronavirus pandemic.

“The Fed did not rock the boat on this one," said Ryan Detrick, chief market strategist at LPL Financial. "It was fairly well-telegraphed what the Fed might do and they did what most people expected."

The Dow Jones Industrial Average rose 0.29percent, to 36,158, the S&P 500 gained 0.65 percent, to 4,661 and the Nasdaq Composite added 1.04 percent, to 15,812.

The Fed also held to its belief that high inflation would prove "transitory" and likely not require a fast rise in interest rates.

“I don’t think that there’s anything unique in the statement other than the fact they’re trying to buy themselves time by saying both the inflation and supply chain disruptions are temporary, and that’s the bottom line," said Joseph LaVorgna, Americas chief economist at Natixis.

In a press conference after the Fed's statement, Fed Chair Jerome Powell said it is possible the US job market may have improved enough by the middle of next year to be considered at "maximum employment," a key hurdle to clear for the central bank to consider increasing interest rates. (Reuters)