Stocks tread carefully amid Fed uncertainty, economic data
Stocks on the US exchanges fluctuated throughout the day before pulling ahead in the late hours of New York trade, as market participants mulled over the Federal Reserve’s next course of action.
Most economists now believe the central bank will continue to purchase bonds at a pace of $85 billion per month until next spring, while a smaller contingency believes a taper will occur before then. The latest FOMC policy statement failed to reassure investors stimulus will remain on the table for a prolonged period, as the Standard & Poor’s 500 Index experienced its first two-day drop in three weeks.
Growth in manufacturing activity, courtesy of a report from the Institute of Supply Management, fueled speculation the Fed will reign in record stimulus sooner than expected. The US manufacturing industry accelerated at its fastest pace in more than two years in October, as manufacturers shrugged off the 16-day government shutdown.
Fed speculation hasn’t put a dent to corporate earnings, which continue to grow faster than projected. Industry analysts have increased their earnings estimates for companies listed on the S&P 500. Three quarters of the 368 S&P 500 companies to report earnings this season have beat profit projections, according to Bloomberg.
The S&P 500 edged up slightly to 1,761.64, a gain of 0.29 percent. First Solar Inc, America’s largest solar panel maker, soared 17.56 percent after third quarter profit nearly doubled. The Dow Jones Industrial Average rebounded more than 69 points to 15,615.50 after 25 of its 30 members reported gains. The Dow was led higher by Pfizer Inc (NYSE:PFE) , JPMorgan Chase Co (NYSE:JPM) and The Boeing Company (NYSE:BA) , which appreciated at least 1.58 percent. The NASDAQ Composite gained 2 points to 3,922.04.
Market participants will shift their attention back to the economic data next week, as several key releases make headlines, including factory orders, services PMI, third quarter GDP and official nonfarm payrolls. This information will be used to assess economic progress and determine the Fed’s timetable for bond tapering.
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