Fed signals tapering of bonds may start soon; Stock futures surge

Wall Street

Bond tapering imminent

U.S. stock markets are expected to extend gains on Thursday after the Federal Reserve held its benchmark interest rate at a range of between zero and 0.25% and indicated it may soon begin tapering its massive bond-buying program.

“If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the Fed said in a statement released after concluding a meeting of its policy-setting committee on Wednesday.

Fed policymakers also signaled interest rate hikes may follow more quickly than anticipated, with nine of 18 policymakers predicting a hike will be needed in 2022.

The central bank noted that while risks to the economic outlook remain, “progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy.”

As to inflation, the Fed retaliated its assessment that consumer prices remain “elevated,” but it continues to view the inflation level as “largely reflecting transitory factors.”

As of 5:15 a.m. ET, futures tied to the blue-chip Dow rallied 251 points or 0.74% to 34,380. S&P 500 futures gained 35 points, or 0.8% to 4,419 while the tech-heavy Nasdaq 100 futures jumped 126 points, or 0.83% to 15,290.

Jobless claims data on tap

Today’s economic calendar includes initial jobless claims data for the week ended Sept. 18. Expectations are for 320,000 claims to have been filed during the week, down from 332,000 a week earlier.

Economists also expect continuing claims for the week to Sept. 11 to come in at 2.6 million from 2.665 million in the previous week.

Other key data releases to watch today include readings on real household net worth, Markit services purchasing managers (PMI) index, Markit manufacturing PMI, Chicago Fed national activity index, and the index of leading economic indicators.

Nike, Costco earnings eyed

There are also quite a few earnings reports that could capture investors’ attention later today.

Darden Restaurants (NYSE: DRI), Rite Aid (NYSE: RAD), Accenture (NYSE: ACN) are among companies scheduled to report ahead of the opening bell.

Analysts expect Darden Restaurants to post earnings of earnings at $1.63 per share on revenue of $2.24 billion.

Rite Aid is expected to post a loss of 42 cents per share on revenue of $6.25 billion, while Accenture is seen reporting earnings of $2.19 per share on revenue of $13.42 billion.

Nike (NYSE: NKE) and Costco Wholesale (NASDAQ: COST) will publish their results after the market close.

Analysts expect Nike to have earned $1.12 per share on revenue of $12.46 billion. Costco Wholesale is projected to report earnings of $3.55 per share on revenue of $61.23 billion.