Stocks higher day after Fed signals a tapering could begin 'soon,' projects future interest rate hike
3 weeks ago
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U.S. equity futures were trading higher one day after the Fed signaled a tapering could begin 'soon' as well as projecting an interest rate hike in 2022.
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The U.S. central bank indicated it may start raising its benchmark interest rate sometime next year, earlier than it envisioned three months ago. It also said it will likely begin slowing the pace of its monthly bond purchases "soon" if the economy keeps improving. The Fed's been buying the bonds throughout the pandemic to help keep long-term interest rates low.
Markets also were reassured after Evergrande, one of China’s biggest private real estate developers, said it will make a payment due Thursday. That likely eased some concerns about heavily indebted Chinese real estate developers and potential ripple effects of possible defaults.
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On Wall Street, the S&P 500 rose 1%, breaking a four-day losing streak. The benchmark index initially climbed 1.4% after the Fed issued its statement at 2 p.m. Eastern.
The other major indexes also received a bump, but shed some of their gains by late afternoon. The Dow Jones Industrial Average rose 1% to 34,258.32. The blue-chip index briefly surged 520 points higher. The Nasdaq composite gained 1% to 14,896.85.