Stocks Move Higher As Powell Managed To Calm Markets

S&P 500 futures are gaining ground in premarket trading as traders continue to buy stocks after yesterday’s Fed Interest Rate Decision and the subsequent commentary from Fed Chair Jerome Powell.

The Fed left the interest rate unchanged and signaled that it may announce the beginning of tapering at the next meeting. In case the economy continues to grow at a healthy pace, the Fed will be able to complete its asset purchase program in the middle of 2022.

Powell has reiterated that Fed will not raise rates before it stops buying assets. Interestingly, Federal funds rate projection moved from 0.1% to 0.3% in 2022, which means that Fed may be ready to increase the rate right after it completes its asset purchase program in June – July of 2022.

The Fed was a bit more hawkish than expected but traders rushed to buy stocks as headline risk evaporated – there is nothing to worry about on the Fed front until the next meeting which is scheduled to take place at the beginning of November.

Initial Jobless Claims Increase To 351,000
U.S. has just released Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims report indicated that 351,000 Americans filed for unemployment benefits in a week compared to analyst consensus of 320,000. Continuing Jobless Claims increased from 2.71 million (revised from 2.67 million) to 2.85 million.

Weaker-than-expected reports may serve as additional bullish catalysts for stocks as Fed remains focused on boosting employment.

Gold Fails To Gain Upside Momentum Despite Weaker Dollar
Gold remains stuck near the resistance level at $1775 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. dollar did not manage to move higher despite hawkish Fed. Treasury yields are gaining ground today, but higher yields do not provide support to the American currency.

It looks that higher yields have put sufficient pressure on precious metals, and gold has been unable to gain additional upside momentum despite weaker dollar. This is bearish for gold mining stocks which may move closer to yearly lows at the beginning of today’s trading session.

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