Wall Street set for strong open as taper fears fade

imageEconomy31 minutes ago (Sep 23, 2021 09:05AM ET)

(C) Reuters. FILE PHOTO: A Wall St. street sign is seen near the New York Stock Exchange (NYSE) in New York City, U.S., September 17, 2019. REUTERS/Brendan McDermid

By Ambar Warrick

(Reuters) – Wall Street was set to rise on Thursday after investors largely brushed off concerns over the Federal Reserve’s plans for tapering, while forecast raises from Accenture (NYSE:ACN) and Salesforce added to the positive mood.

The Fed said on Wednesday it could begin reducing its monthly bond purchases by as soon as November, and that interest rates could rise quicker than expected by next year. The central bank also projected inflation at 4.2% by the year-end, more than twice its target rate of 2%.

Accenture and Salesforce.com Inc (NYSE:CRM) boosted their first-quarter and full-year earnings forecasts, respectively, as the IT services providers benefited from more companies maintaining work-from-home models.

Accenture’s shares gained 1.8% in premarket trade, while Salesforce rose 2.8%.

The Fed’s November deadline had been largely priced in by markets. Relief over the Fed, along with easing concerns of a default by Chinese property developer Evergrande, saw all three Wall Street indexes jump around 1% on Wednesday.

The Dow and the S&P had marked their best day in two months, as they staged a strong recovery from two-month lows hit earlier in the week.

“The Fed’s stance is still accommodative and it’s reasonable for the Fed to want to return to a state of normalcy if the economy is as robust as the data suggests,” said Mike Loewengart, managing director, investment strategy at E*TRADE Financial.

“Given the recent volatility, it’s likely that investors are viewing the taper projection and potential 2022 rate hikes as a vote of confidence that the recovery is on track.”

U.S. S&P 500 E-minis were up 27 points, or 0.62% at 08:31 a.m. ET. Dow E-minis were up 235 points, or 0.69%, while Nasdaq 100 E-minis were up 80.75 points, or 0.53%.

Futures showed little reaction to a bigger-than-expected rise in weekly jobless claims.

Wall Street indexes are still trading lower for the month, owing to seasonally weak trends, as well as concerns over fiscal spending and a slowdown in economic growth.

Major banks rose in premarket trade on expectations of an eventual rise in interest rates.

Investors were now awaiting preliminary business activity data for September, due at 9:45 a.m. ET (1345 GMT). A Reuters poll expects growth in manufacturing and services activity to have remained steady through the month.

Wall Street set for strong open as taper fears fade

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