The Federal Reserve gave repeated signals yesterday (Dec. 15th) that its ultra-easy policy since the start of the Covid epidemic is coming to an end.
Although they took actions that were far more forceful than markets had expected, Chairman Jerome Powell was actually able to reverse market losses on the day…
The S&P 500 went from being down about 0.3% to up 0.5% immediately after the announcement. And it finished 1.6% higher on the day. Here's what they announced:
The Fed declared it will accelerate the reduction of its monthly bond purchases.
Starting in January, the Fed will buy $60 billion in bonds per month. That's half of what it was buying before the November taper and $30 billion less than it was buying in December.
In November, the Fed began tapering by $15 billion per month, then doubled it in December, and will continue to do so until 2022.
Following that, the central bank intends to begin hiking interest rates, which were held constant at yesterday's meeting. Their plan is to start hiking rates in March.
According to projections presented on Wednesday, the Federal Reserve expects three rate hikes in 2022, two the following year, and two more in 2024.
It's certainly a bold strategy, and will be interesting to see how it all plays out. In the meantime, here are three stocks you can trade to play the Fed's decision…
1.) Toyota (TM) rose 2.2% in premarket trading yesterday, after stating that it would produce a record 800,000 vehicles in January. Toyota is increasing manufacturing to compensate for lost production due to parts shortages.
2.) Chatham Asset Management, the printing company's largest shareholder, agreed to buy RR Donnelley (RRD) for $897 million. After finding that Chatham's bid was a “better proposition,” Donnelley cancelled a previous buyout agreement with private equity company Atlas Holdings. In the premarket, the shares dropped 2.8 percent on Wednesday.
3.) CMC Materials (CCMP) agreed to be bought out by rival Entegris (ENTG) in a cash-and-stock arrangement. The deal is worth $197.53 per CCMP share, based on Tuesday's closing prices, compared to CCMP's Tuesday finish of $145.97. In the premarket, CCMP was up more than 25%, while Entegris was down 3% yesterday.
Where to invest $1,000 right now…
Before you consider trading these 3 stocks, you'll want to see this…
Picture the perfect stock for a moment.
What would it look like?
No doubt it would have hundreds of billions in revenue – more than tech giants like IBM, Facebook and Google.
It would probably be a leader in cutting-edge technology like smartphones, robotics, e-commerce and medical equipment.
It would have tens of thousands of unbreakable patents.
It would pay an enormous dividend.
It would be on the verge of dozens of blockbuster announcements that would send the stock higher and higher.
And most of all…
It would trade ultra-cheap – less than $3.
It seems crazy that such a stock exists.
And you’ve likely never heard of it.
Because it trades under a secret name.
Seriously, it’s true.
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He says this single stock alone could pay for your retirement.
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