US stocks rise on anticipation of prolonged Fed stimulus
Stocks on the American exchange edged higher after a mixed batch of economic data reaffirmed expectations for prolonged federal stimulus. The Federal Reserve will coalesce in Washington for a two-day meeting to discuss quantitative easing, culminating in this year’s second last rate decision and monetary policy announcement Wednesday.
Production volumes in US industries accelerated at a rate of 0.6 percent last month, beating estimates. However, contracts to buy pre-existing homes declined 5.6 percent in September. Pending home sales have declined for four consecutive months, with September being the first time in 29 months contracts were lower than year-ago levels.
The Standard & Poor’s 500 extended its record high, climbing 2 points to 1,762.11. Burger King led the gains, advancing 5.77 percent after the global fast food chain posted better than expected third quarter revenues.
The S&P 500 rallied close to 1 percent last week for its third consecutive weekly gain. The benchmark gauge has gained almost 5 percent this month amid another strong earnings quarter. The Dow Jones Industrial Average fell flat, losing 1 point to 15,568.90. In total, 17 of the Dow’s 30 members reported gains, led by Procter & Gamble and Coca-Cola, which advanced at least 1.49 percent.
Over the next two days market participants will divert their attention to the Fed meetings for clues about future policy.
Interest rates will remain at record lows and the pace of monthly asset purchases will be kept $85 billion per month, according to economists. “With Janet Yellen coming on stream… the Fed will continue to ease and print money until at least March and probably beyond,” said Bruce Bittles, chief investment strategist at RQ Baird & Co. An October Bloomberg survey showed economists are in-line with Bittles’ forecast; the partial government shutdown’s impact on the economy, combined with slower than expected job growth, will prompt Fed policymakers to wait until at least March to reign in record stimulus.
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