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market and it will

Started by DMT, 2018/06/27 11:01PM
Latest post: 2018/06/27 11:01PM, Views: 67, Posts: 1
market and it will
#1   2018/06/27 11:01PM
DMT
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By Xinhua Writer Sun Oumeng


NEW YORK, Sept. 20 (Xinhua) -- U.S. stocks wavered in a narrow range on Wednesday, with the Dow and S&P 500 closing at record highs, after the Federal Reserve announced that it will start to unwind its 4.5-trillion-U.S.-dollar balance sheet from October, a further step to end the loose monetary policy.


The Dow Jones Industrial Average added 41.79 points, or 0.19 percent, to 22,412.59. The S&P 500 inched up 1.59 points, or 0.06 percent, to 2,508.24.


Many analysts said the central bank's announcement wasn't very surprising, and financial markets seemed steady after the statement.


The financial market's reaction to the Fed's latest decision was relatively muted as the announcement was generally in line with Wall Street's expectations, Omair Sharif, senior U.S. Economist at Societe Generale, told Xinhua Wednesday.


He also mentioned an October start date by the Fed has a few advantages. After the Fed's announcement, shares of many big banks were all up, lifting major indices.


"With markets already keenly aware of the Fed's plan on tapering its holdings going forward, starting the process in October allows Fed officials to put the program on auto-pilot and refocus squarely on the economic fundamentals, which will be increasingly necessary given that the data are likely to be choppy in the wake of the hurricanes," said Sharif.


The CBOE Volatility Index, widely considered the best gauge of fear in the market, declined 3.93 percent to close at 9.78, on Wednesday.


"The risk for the FOMC (Federal Open Market Committee) in the balance sheet is in how it moves credit - particularly the Mortgage Backed Security market. The owning of U.S. Treasury Bonds is less problematic," Robert Savage, CEO of CC Track Solutions, told Xinhua.


"Both will have an effect on the market and it will be a de facto tightening of credit and lifting of rates but how much is unknown, so the plan is to do this slowly - which may be fine and likely will be ignored by the market until suddenly it matters - so my feeling is that this will matter in 2018 not now," Savage added.


Even though analysts concerned about market sensitivity, they saw continued momentum for equity valuations through further improved corporate earnings.


"We maintain our positive view on equities and have recently increased allocations given improving earnings per share, support from fiscal stimulus and Fed dovishness," Humberto Garcia, Head of Global Asset Allocation for Leumi Investment Services Inc., said in a note.


Meanwhile, the Fed also decided to leave interest rate changed this time, as investors widely expected. Now, traders shifted their focus to when will be the Fed's next move on hiking interest rate.


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