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Stocks Consolidate Friday’s Gains

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Stocks Consolidate Friday’s Gains

Stocks in the US started the trading session in the black on the heels of Friday’s robust rally.  Pundits are now convinced that investors are comfortable with the idea that tapering is not tightening despite a stronger than expected employment reports that put the unemployment rate near 7%.  The Fed has tied rates to an unemployment rate of 6.5%, which could be tested if the economy continues to gain traction.  All three major indices settled up on the session.

On Friday, the Labor Department released a better than expected payroll report that showed that 203K jobs were created in November, compared to the 180,000 expected.  Hourly earnings increased by 0.2% which was also strong.  The unemployment rate dropped to 7%, which reflects an increase in nearly 820K jobs in November, which is a very robust number.  Stocks rallied heavily which makes it clear that traders now believe good news is good news.

US data has been the market driven but tame Chinese inflation data has also been a benefit to stocks. China’s exports climbed a greater-than-expected 12.7% on year in November and helped the country’s trade surplus increase 8.7% on year to $33.8 billion, the highest level since January 2009. Meanwhile, inflation nudged down to 3% on year from 3.2% as a rise in food prices eased. The trade figures indicate that the global economy is beginning to tick along nicely, while the softening inflation could give China’s central bank room to refrain from further tightening.

Bank stocks could be under pressure this week as the SEC widens its probe into hiring practices at banks. Goldman Sachs (NYSE:GS) , Deutsche Bank (NYSE:DB) and Credit Suisse (NYSE:CS) have reportedly joined JPMorgan (NYSE:JPM) on the list of banks being investigated for their hiring practices in China. The SEC is looking at whether the banks breached laws relating to foreign bribery by recruiting the family members of the well-connected in order to win business.

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