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US stocks rebound as weak data dampen likelihood of a bond taper

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US stocks rebound as weak data dampen likelihood of a bond taper

US stocks closed the week on a high point as economic data failed to invigorate expectations for a bond taper following next week’s Federal Open Market Committee policy meetings. Combined with the recent flow of jobs data, market participants are less inclined to believe a taper will happen this month, suggesting the Fed will postpone its plans to shift monetary policy until later in the year.

Economists still anticipate a tapering of the Federal Reserve’s $85 billion in monthly asset purchases this month, according to a September Bloomberg survey. The median estimate calls for a rollback of $10 billion, versus expectations for a $20 billion rollback in the August survey.

On the market side, the combination of slow employment growth and declining consumer confidence has helped to diminish expectations for an imminent shift in monetary policy. Employment growth in July and August was the slowest in a year, according to official reports from the Labor Department. On Friday consumer confidence declined to its lowest level since April, with a reading of 76.8 on the Thomson Reuters/University of Michigan Consumer Sentiment Index.

The Standard & Poor’s 500 erased Thursday’s losses by gaining more than a quarter percent to 1,687.87. The benchmark gauge experienced its best week in two months, gaining 1.5 percent since Monday. The Dow Jones Industrial Average advanced more than 75 points after Thursday’s session put an end to three consecutive days of triple digit gains. The Dow’s biggest gainer was Intel Corporation, which advanced more than 3.5 percent one day after announcing it will close its Massachusetts plant. Walt Disney Co advanced 1.83 percent, extending its weekly gains to almost 8 percent after announcing it will buy back $6 to $8 billion of its stock.

The NASDAQ Composite closed the week on a 1.5 percent gain after moving up 6 points to 3,722.18.

Trade and speculation will feed into each other early next week when the Federal Open Market Committee coalesces around monetary policy and the future of its stimulus program.

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