Stocks Retreat Amid Fed Taper Worries

Stocks Remain Weak In Premarket Trading

S&P 500 futures are under strong pressure in premarket trading as traders remain worried about the potential reduction of Fed’s asset purchase program.

Yesterday, traders had a chance to take a look at FOMC Minutes which indicated that Fed could begin to reduce the pace of its asset purchases in 2021. The major support from the Fed served as one of the key catalysts for the market’s rally, so traders are worried that the rally may lose steam once Fed reduces the pace of asset purchases.

It should be noted that the market looks really nervous as yesterday’s 1% plunge is followed by a significant downside move in premarket trading.

Initial Jobless Claims Declined To 348,000

U.S. has just released Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims report indicated that 348,000 Americans filed for unemployment benefits in a week while analysts expected that Initial Jobless Claims would total 363,000. Continuing Jobless Claims decreased from 2.9 million (revised from 2.87 million) to 2.82 million.

The reports may put additional pressure on stocks as healthy job market will boost chances that Fed would cut its asset purchase program in the fourth quarter of this year.

WTI Oil Is Under Strong Pressure

WTI oil has recently made an attempt to settle below the $63 level amid worries about the negative impact of the fast spread of the Delta variant of coronavirus.

Yesterday, EIA Weekly Petroleum Status Report indicated that crude inventories declined by 3.2 million barrels. However, gasoline inventories increased by 0.7 million barrels, which served as a bearish catalyst for the market.

In addition, the report indicated that U.S. domestic oil production increased from 11.3 million barrels per day (bpd) to 11.4 million bpd, which also put pressure on the oil market.

Today, oil-related stocks may test multi-month lows as they will likely find themselves under strong pressure at the beginning of today’s trading session.

For a look at all of today’s economic events, check out our economic calendar.