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Although traders are still digesting Fed’s policy statement, Thursday’s US session closed on a positive note for both US stocks and the US dollar, seen rising at the same time.
The interest rate policy statement and the remarks by Fed Chairman, Jerome Powell, were among the most important factors that continued to move the markets on Thursday since those statements appeared hawkish.
A series of Q4 earnings and economic reports combined to push the stock market higher Thursday morning, a day after wide swings greeted the Federal Reserve’s latest views.
The Nasdaq composite and S&P 500 climbed 1.3% at 10 a.m. ET. The Dow Jones Industrial Average rose 1%. Small caps were up a good amount as well, as the Russell 2000 also added 1.3%. Volume fell on the Nasdaq and rose on the NYSE compared with the same time on Wednesday.
The stock market’s volatility in the new year was in full display Wednesday, when indexes fluctuated widely before and after the Fed announced its latest monetary policy. The Fed set the stage for an interest-rate increase in March. It plans to end bond purchases by then, capping emergency measures put in place for the COVID-19 crisis. Today, the market seemed at ease with the move.
The US growth data, which was very positive, had a significant influence that added to the positivity that prevailed the market.
Economic data
The GDP growth reading has been a record since 1984, surging to 6.9% compared to the previous reading of 2.3%, which exceeded expectations that indicated 5.5%.
Pending Home Sales in the US fell by 3.8% on a monthly basis in December following November’s 2.3% decline (revised lower from a 2.2% decline), data published by the US National Association of Realtors showed on Thursday.
The new data was well below expectations for a decline of 0.2% MoM. The Pending Home Sales Index fell to 117.7 in December from 122.3 (downwardly revised from 122.4) in November.
Other developments
Geopolitical tensions are escalating between Russia and Ukraine, bringing about more concerns about potential crude oil supply disruption as an undesired side effect, and accordingly oil price hikes.
