Economic growth in China helps propel US stocks
Economic data from China has topped headlines this week, suggesting the world’s second largest economy gained traction in August. China’s trade balance widened to $28.6 billion US last month, led by robust export growth. Consumer inflation moderated to 2.6 percent for the year ending August 31 after reaching 2.7 percent in July. Wholesale inflation dropped at an annualized rate of 1.6 percent in August, compared to a 2.3 percent fall the previous month.
On Tuesday’s China’s Statistics Bureau reported better-than-expected annualized growth for retail sales and industrial production. Retail sales advanced 13.4 percent year-on-year, while industrial production advanced 10.4 percent. Economic growth in China is a key indicator of global recovery, and the August data suggest the government hasn’t abandoned growth as one of its primary targets.
The benchmark indices responded positively to China, gaining at least 0.6 percent. The Standard & Poor’s 500 advanced 0.73 percent to 1,683.99. As it now stands, the S&P 500 is 26 points shy of its all-time high. The index has advanced for six consecutive days, the most since mid-July. The Dow Jones Industrial Average posted its second consecutive three-digit gain, closing the day more than 0.8 percent higher to 15,191.10.
New Dow Members Goldman Sachs (NNYSE:GS), Nike (NYSE:NKE) and Visa (NYSE:V) each jumped at least 2.1 percent. Earlier in the day it was announced they would replace Hewlett-Packard, Alcoa and Bank of America in the Dow Jones index.
Propelling the stock market’s rise was hope that a US-led strike on Syria would be averted. Russia’s plan calling for Syria to surrender its chemical weapons to international authorities has gained traction. The government of Syrian President Bashar al-Assad has accepted the Russian-backed plan, as has US Secretary of State John Kerry. Congress will vote on whether to authorize the use of military force against Syria Wednesday. President Barack Obama said his administration would carefully consider Russia’s plans, but wouldn’t rule out a strike.
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