Stock futures surge; Fed, ECB, Jobless claims, Reddit IPO, and more

Jerome Powell

Fed speeds up tapering of its bond-buying program; projects 3 rate hikes in 2022

All attention was on the Federal Reserve on Wednesday, following the conclusion of its two-day Federal Open Market Committee (FOMC) meeting.

In its post-meeting statement, the Fed announced it was reducing its monthly asset purchases by $30 billion per month from its previous pace of $15 billion, bringing the end of its quantitative-easing (QE) tapering to earlier than the June end-date it had originally planned.

“In light of inflation developments and the further improvement in the labor market, the Committee decided to reduce the monthly pace of its net asset purchases by $20 billion for Treasury securities and $10 billion for agency mortgage-backed securities,” the statement read.

As expected, the Fed left interest rates unchanged at 0.00-0.25% but signaled the possibility of three rates next year.

All 18 FOMC members said they could see the case for at least one rate hike in 2022, a significant revision up from September’s projection that showed they were divided on a 2022 rate hike.

More gains ahead for U.S. stocks

U.S. stock futures were higher on Thursday morning, implying Wall Street will extend the gains recorded in the previous session, as traders continue to digest the Fed’s monetary policy decision.

As of 5:00 a.m. ET, Dow futures surged 162 points, or 0.45% to 36,088. S&P 500 jumped 23.75 points, or 0.5% to 4,733.25 while the tech-heavy Nasdaq 100 futures rose 95 points, or 0.58% to 16,383.

On Wednesday, the Dow closed 383.25 points, or 1.08% higher to 35,927.43 after the central bank said it would accelerate the tapering of its bond-buying stimulus program.

The S&P 500 edged up 75.76 points, or 1.63% to end the session at 4,709.85 while the Nasdaq Composite rallied 327.94 points, or 2.15% to finish at 15,565.58.

ECB decision, Jobless claims data eyed

Meanwhile, traders will be closely watching the European Central Bank (ECB) today, as it prepares to announce its monetary policy decision this Thursday at 7:45 a.m. ET, which will be followed by President Christine Lagarde’s press conference 45 minutes later.

The ECB is still one of the more dovish major central banks and has maintained a patient approach in spite of surging consumer prices.

However, economists expect the bank to signal a modest tightening of its policy stance, announcing it will end its unrestricted bond purchases at the end of March.

Meanwhile, the U.S. Labor Department will publish its weekly report on initial jobless claims at 8:30 a.m. ET. Expectations are for another 200,000 claims to have been filed in the week ended Dec. 11, up from the 184,000 filed during the previous week.

Reddit files confidential IPO paperwork with SEC

Reddit, the social media company where millions of enthusiastic day traders took Wall Street by storm during the meme-stock mania earlier this year, has filed confidential paperwork with the SEC ahead of a potential IPO.

“Reddit, Inc. today announced that it has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”) relating to the proposed initial public offering of its common stock,” the company said in a press release on Wednesday.

“The number of shares to be offered and the price range for the proposed offering have not yet been determined. The initial public offering is expected to occur after the SEC completes its review process, subject to market and other conditions,” the company added.

Reddit was founded 16 years ago by Steve Huffman and entrepreneur Alexis Ohanian. As of October last year, it had about 52 million daily active users (DAUs) and more than 100,000 communities, or “subreddits.”

According to Crunchbase, Reddit has raised about $1.3 billion in funding so far.