S&P 500, Dow 30, Nasdaq 100 and Russell 2000 at record highs as rate hikes may not be coming soon

By: |
November 05, 2021 3:20 PM

In a feat not seen since January 2018, the S&P 500, the Dow Jones Industrial Average, the Nasdaq 100 and the Russell 2000 closed at their all-time highs for a second straight day.

US Stocks, S&P 500, Dow 30, Nasdaq 100, Russell 2000, index shares, investorsU.S. companies added the most jobs in four months, suggesting employers are making progress in filling a near-record number of open positions.

Bloomberg: Stocks climbed to a record after the Federal Reserve signaled monetary policy will remain accommodative even as the central bank starts reducing its massive bond-buying program this month.

In a feat not seen since January 2018, the S&P 500, the Dow Jones Industrial Average, the Nasdaq 100 and the Russell 2000 closed at their all-time highs for a second straight day. The Treasury curve steepened after Fed Chair Jerome Powell sought to stress that tapering doesn’t mean rate hikes are coming soon. He said officials can be patient on tightening, but won’t flinch from action if warranted by inflation. The dollar fell.

“Powell was very careful not to make any missteps today, sticking carefully to his script that their focus is on tapering, not raising rates,” wrote Seema Shah, chief strategist at Principal Global Investors. “That’s a shame, because interest-rate hikes are all that markets want to talk about!”

Traders largely maintained bets on the timing of rate increases from the level they were at prior to the decision. Money-market derivatives show about 55 basis points of rate hikes by the end of 2022. The first one is seen coming around July, with about a 70% chance it comes the month before, overnight index swaps show.

The Treasury announced the first reduction in its quarterly sale of longer-term debt in more than five years on Wednesday, reflecting diminishing borrowing needs as the wave of pandemic-relief spending ebbs.

U.S. companies added the most jobs in four months, suggesting employers are making progress in filling a near-record number of open positions. The data precede Friday’s monthly employment report from the Labor Department, which is forecast to show that private payrolls increased by 408,000 in October. Service providers expanded at a record pace in October, powered by resilient demand and stronger business activity.

Some corporate highlights:

Bed Bath & Beyond Inc. announced accelerated share buybacks and the launch of a new digital marketplace for merchandise from third-party producers.
CVS Health Corp. raised its annual forecast.
Lyft Inc.’s results showed the ride-hailing company is set for a much stronger recovery than expected.
T-Mobile US Inc.’s profit beat estimates, with the carrier raising its forecast for savings from its takeover of Sprint.
Video-game company Activision Blizzard Inc. gave an outlook that was seen as disappointing.
Read: OPEC+ Heads for Geopolitical Showdown as Biden Demands More Oil

Here are some events to watch this week:

OPEC+ meeting on output, Thursday
Bank of England rate decision, Thursday
U.S. trade, initial jobless claims, Thursday
U.S. unemployment, nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

The S&P 500 rose 0.6% as of 4 p.m. New York time
The Nasdaq 100 rose 1.1%
The Dow Jones Industrial Average rose 0.3%
The MSCI World index rose 0.5%

Currencies

The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.2% to $1.1605
The British pound rose 0.5% to $1.3680
The Japanese yen was little changed at 114.01 per dollar

Bonds

The yield on 10-year Treasuries advanced four basis points to 1.59%
Germany’s 10-year yield was little changed at -0.17%
Britain’s 10-year yield advanced four basis points to 1.07%

Commodities

West Texas Intermediate crude fell 4.9% to $79.82 a barrel
Gold futures fell 0.9% to $1,772.70 an ounce

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