S&P, Nasdaq hit record highs after Powell nomination seen as safe bet

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  • Financials rally on fee hike expectations
  • Nasdaq hits second consecutive record excessive
  • Fed Governor Lael Brainard to be vice chair
  • Indexes up: Dow 0.67%, S&P 0.72%, Nasdaq 0.66%

Nov 22 (Reuters) – The S&P 500 and the Nasdaq hit record highs on Monday after President Joe Biden picked Federal Reserve Chair Jerome Powell to steer the financial institution for a second time period, protecting the established order as the central financial institution plans to wind down pandemic-era stimulus.

Powell’s nomination, which is able to see him main the Fed for an additional 4 years, was largely welcomed by traders hoping for no large adjustments within the Fed as it guides the financial system by means of a post-COVID restoration. learn extra

Fed Governor Lael Brainard, who was the opposite prime candidate for the job, will likely be vice chair, the White House mentioned.

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“Markets like predictability … while Brainard may have been a fine choice, the markets would not know what to expect from her even though the general consensus was that it meant lower rates for longer,” mentioned Randy Frederick, managing director of buying and selling and derivatives, Charles Schwab, Austin, Texas.

Financials have been one of the best performers in early commerce with a 1.0% soar.

Wall Street’s main banks surged between 1.5% and three%, monitoring a soar in Treasury yields as traders priced within the Fed’s coverage tightening by the primary half of 2022. Wells Fargo & Co(WFC.N) led positive aspects amongst its friends.

“The message is that we’re on a course to reduce tapering and we’re headed towards higher interest rates, which will most likely going to be raised in the middle of next year, and I think Wall Street has already digested most of that,” mentioned Robert Pavlik, senior portfolio supervisor at Dakota Wealth Management.

Futures contracts tied to the Fed’s coverage fee moved, with cash markets now anticipating the U.S. central financial institution to lift rates of interest by 25 foundation factors by subsequent June versus July beforehand.

“This is sort of another confirmation that the Fed has a plan.”

Safe-haven sectors together with actual property (.SPLRCR) and healthcare (.SPXHC) have been the worst performers in early commerce, dropping about 0.6% every.

The Nasdaq (.IXIC) hit a second consecutive record excessive as demand for expertise shares remained robust. Heavyweights together with Amazon (AMZN.O), Apple (AAPL.O) and Meta Platforms (FB.O) rose between 0.1% and a pair of%.

The tech sector outperformed final week, serving to the Nasdaq (.IXIC) shut over the 16,000 stage for the primary time as issues over rising COVID-19 instances in Europe drove up safe-haven demand.

Travel and power shares, which have been among the many worst performers final week, additionally surged.

At 09:51 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 238.50 factors, or 0.67%, at 35,840.48, the S&P 500 (.SPX) was up 33.62 factors, or 0.72%, at 4,731.58, and the Nasdaq Composite (.IXIC) was up 105.57 factors, or 0.66%, at 16,163.01.

Investors have been now awaiting a slew of financial information this week, together with IHS enterprise exercise readings, private consumption expenditure, and minutes of the Fed’s newest assembly.

Among different movers, Tesla Inc (TSLA.O) gained 4.8% after CEO Elon Musk tweeted that the Model S Plaid will “probably” be coming to China round March. learn extra

Activision Blizzard (ATVI.O) slipped 1.1% after a media report that the online game writer’s prime boss, Bobby Kotick, would take into account leaving if he can’t rapidly repair tradition issues. learn extra

Advancing points outnumbered decliners by a 1.72-to-1 ratio on the NYSE. Declining points outnumbered advancers for a 1.08-to-1 ratio on the Nasdaq.

The S&P index recorded 19 new 52-week highs and 7 new lows, whereas the Nasdaq recorded 56 new highs and 247 new lows.

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Reporting by Ambar Warrick and Devik Jain in Bengaluru; Additional reporting by Bansari Mayur Kamdar and Shreyashi Sanyal; Editing by Shounak Dasgupta and Maju Samuel

A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. December 28, 2016. REUTERS/Andrew Kelly/File Photo