Fed Taper Sends Stocks To New Record Highs

Plus 5 New Strong Buys for Today Fed Taper Sends Stocks To New Record Highs [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Fed Taper Sends Stocks To New Record Highs [Fed Taper Sends Stocks To New Record Highs]Image: Bigstock Stocks closed up yesterday with all of the major indexes hitting new all-time highs once again. The main focus yesterday was the Fed’s FOMC Announcement. As expected, they left rates unchanged, but confirmed they will begin their bond taper by the middle of the month. Currently, they are buying $80 billion a month in Treasuries, and $40 billion a month in mortgage-backed securities. They will reduce their Treasury purchases by -$10B, and reduce their mortgage-backed security purchases by -$5B. They said they will adjust their tapering based on the economic data. But it was suggested that they could fully wind down their bond-buying by the middle of next year. If so, let’s do the math; that’s $120 billion, divided by 8 months (between now and June of next year), which means they will need to reduce their total bond-buying by -$15B per month to get to zero by next June. I’m guessing they would wait to announce further tapering at the conclusion of each FOMC Meeting. And after the one they just had yesterday, there’s 5 more meetings left thru June ’22. According to the Fed’s tentative meeting schedule, their next meeting is in December, then January, March, May and June. I’m speculating here, but that means some months we could see a reduction that mirrors the preceding month, while other months could be doubled up. This assumes that June remains a target. But again, if the economy warrants it, they could pause their reduction pace until a later time, thus pushing the zero date further out. The only other thing that was new in yesterday’s meeting was the addition of the word ‘expected’ when describing the transitory nature of the inflation factors. Instead of saying those inflation factors are transitory, they qualified it by saying those inflation factors are ‘expected to be transitory.’ Meaning, while they are expecting these inflationary pressures to dissipate in time, some may take longer, or possibly not be transitory at all. So why did stocks rally? Because rates are still expected to stay at zero for some time. And the action on QE shows they are doing something to potentially reduce inflation. And the markets cheered the news. In other news, PMI Composite report showed the Composite Index at 57.6, up from last month’s 57.3, while the Services Index rose to 58.7 vs. last month’s 58.2. The ISM Services Index jumped to 66.7, up from last month’s 61.9 and views for the same. Factory Orders rose 0.2% vs. the consensus for 0.1%. And finally, the ADP Employment Report came in well above expectations with an estimated 571,000 new private sector jobs created last month vs. the consensus for 400,000. In the meantime, stocks are at record highs. And it looks like there’s a lot more upside to go. So make sure you’re taking full advantage of it. That means getting into the right stocks and staying out of the wrong ones. If you’re looking for new names that could potentially become big winners, be sure to check out our latest commentary… [The Next Chartbuster Tech Stocks for Your Portfolio]( ) Best, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research Sponsor [Surprising strategy makes this stock pay up to 35%]( Some say right now it's not the best time to invest in dividend stocks due to lower yields...but I disagree. I recently found two new stocks that use a clever tactic to boost their yields AND both pay monthly dividends. 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