Stocks rebound post-FOMC
Growth in global manufacturing inspired a strong rally for US stocks on the heels of Wednesday’s FOMC minutes. The market’s appetite for risky investments nudged higher following the release of upbeat manufacturing data in the Eurozone and United States. Manufacturing growth outpaced expectations for both Germany and the Eurozone, a report by Markit Economics showed. Germany also led growth in the services sector, a strong indicator the Eurozone is headed out of recession. PMI signals also showed the US experienced its strongest manufacturing expansion in fourth months, signalling economic recovery may be enough to buoy market sentiment when the US Fed begins reducing its monthly asset purchases.
PMI figures capture business conditions in the manufacturing sector. Manufacturing PMI is a critical indicator of business conditions in the overall economy, due to the manufacturing industry’s large contribution to gross domestic product.
The benchmark indices all rallied on manufacturing growth. The Dow Jones Industrial Average jumped more than 66 points to 14,963.70, after falling below 15,000 Wednesday. The Standard and Poor’s 500 gained more than 14 points, or three-quarters of a percent, to close the New York day at 1,656.96. The benchmark gauge remains well below its record high of 1,709.67.
The NASDAQ Composite was propelled higher by tech stocks, led by Yahoo! Inc., which advanced more than 3 percent to $27.90 as the market learned it attracted more monthly visitors than Google in July. Google, the world’s leading search engine, advanced more than half a percent to $873.71. The NASDAQ ended the day 39 points higher, closing at 3,638.71.
Market participants are currently trapped in a prolonged tug-of-war between concerns over monetary policy and an improving global economy. On Thursday investors were drawn more toward growth prospects than Fed policy, headlined by a surge in global manufacturing.
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