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S&P500
US stock market soared after the Federal Reserve announced its decision to start QE tapering.
The Dow Jones Industrial Average rose by 0.3%, the NASDAQ gained 1%, and the S&P500 added 0.65%.
On Thursday morning, the Asian markets went up as well, with the Nikkei and the Shanghai Composite gaining 0.9% and 1% respectively.
Oil prices dropped sharply following the Fed's announcement. Brent crude fell by $2.5, or 3%, to $81.50 a barrel.
COVID-19 cases continue to climb worldwide, with 480,000 new infections reported yesterday. The infection rate in the US again surpassed 75,000 cases. The US and Russia lead the world in the daily number of confirmed deaths from the virus, with 1,400 and 1,100 deaths reported respectively.
The S&P500 is trading at 4,660 and is expected to be in the 4,620-4,680 range. As anticipated, yesterday, the Federal Reserve announced that it would taper its monetary stimulus program, reducing it by $15 billion a month from the current level of $120 billion. The Fed may alter the pace, depending on the situation. Notably, it considers the current period of high inflation as "transitory", without mentioning possible rate hikes. As a result, the stock indices went up after the decision, while the dollar remained steady.
On Wednesday, the US released important economic data. The ISM Services PMI rose to 66.7% in October from 61.9% in September, beating market expectations. ADP Non-Farm Employment change was also higher than anticipated, reaching 570,000 new jobs. In addition, the September report was revised upwards to 568,000. According to ADP, more than 1 million jobs were created in the United States in 2 months.
Today, the Department of Labor will release its weekly unemployment report. Initial jobless claims are forecasted to rise by 270,000.
The US Senate is debating the Democrats' climate change plan and social spending package. After the Democrats agreed to raise the tax deduction cap, the spending package is likely to be approved by the Senate.
An increase in stock indices following the Fed's decision indicates investors are highly optimistic. However, prices are too high for strategic buying at this point. Buyers should wait for a strong pullback to the 50-day moving average at the very least.
USDX is trading at 94.0 and is expected to be in the 93.70 - 94.30 range. After holding steady on Fed's decision yesterday, the dollar again approached the weekly highs on Thursday morning. In the long term, the Federal Reserve's policy is pushing the dollar up, though not as strongly as anticipated. The euro's outlook is still uncertain. The pair is expected to trade sideways.
USDCAD is trading at 1.2405 and is expected to be in the 1.2350 - 1.2450 range. The pair did not receive support from the dollar. However, pressure on the pair reduces amid falling oil prices. The quote is expected to move sideways.
The Fed has announced its decision. Now, investors should realize the market needs a correction, even if growth follows afterward. The US market is likely to enter a correction.
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