US stocks remained flat this morning (October 29th), as investors await a statement from the US Federal Reserve, which is expected to announce the end of its quantitative easing programme.
The Dow Jones industrial average edged up 0.21 per cent to 17,041.55 at 10:20 ET, while the S&P 500 gained 0.21 per cent, to 1,989.14 and the Nasdaq Composite dropped or 0.18 per cent, to 4,555.90.
In recent months, the Fed's main policy making committee has been gradually cutting back its stimulus programme, which started in 2008. The markets are widely expecting that the end of the scheme will be announced today, as the US economy has shown signs of a durable recovery, and unemployment is now below six per cent.
In total, the Fed has added $3.7 trillion (£2.3 trillion) worth of assets to its holdings.
“The exit protocol has been so well documented for the last nine months that the market has fully priced it in,” Barbara J. Cummings, who manages a $3.5 billion fixed-income portfolio for the Boston Private Bank & Trust Company. told the New York Times.
“I don’t anticipate any movement. I feel as though this is one meeting where they almost don’t need to hold it because they have made it perfectly clear.”.
Senior Fed officials argue that the programme prevented a much worse downturn, and that unemployment is lower and economic activity higher than they would otherwise have been, the BBC reports.
The Fed next plans to enter a final phase in which it will maintain the size of the bond portfolio and keep short-term interest rates near zero. Fed officials have hinted that a rate increase is likely to happen in the middle of 2015.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.