US stocks edge higher on QE bets
Stocks on the American exchanges rose, as market participants continued to digest the prior week’s data wire. The Dow Jones Industrial Average hit a record high for the third time in a week amid speculation the Federal Reserve could taper bond purchases sooner than expected.
The US economy was more resilient than economists expected leading up to the final quarter of 2013. Gross domestic product—the value of all goods and services—rose 2.8 percent from year-ago levels. Employers added 204,000 payrolls in October, far exceeding growth estimates.
Strong corporate earnings and record stimulus continue to underpin the stock market’s best performance in a decade. Quantitative easing has propelled the Standard & Poor’s 500 more than 160 percent higher since 2009. Companies listed on the benchmark gauge have played their part; three-quarters of the 449 S&P 500 companies to report earnings this quarter have exceeded forecasts, according to Bloomberg.
The S&P 500 edged closer to its all-time record, rising more than 1 point to 1,771.89. The Dow Jones Industrial Average rose more than 21 points to 15,783.10 despite only 13 of its 30 members reporting gains. IBM (NYSE:IBM) and Wal-Mart Stores (NYSE:WTI) advanced at least 1.35 percent, while Dow newcomers Goldman Sachs (NYSE:GS) and Visa (NYSE:V) added at least 0.41 percent.
“Investors want to know the strength of the US consumer going into what might be a tepid holiday season,” says Alison Porter of Ignis Asset Management. American households have struggled with rising fuel costs, higher social security taxes and a volatile job market—trends that have hurt consumer spending. Wal-Mart and The Home Depot (NYSE:HD) have yet to report their quarterly earnings.
Growth is expected to slow in the final quarter of the year, according to most economists. Many believe the 16-day government shutdown slowed the pace of US recovery. The budget ceiling cushion expires February 7, 2014, which could set up another round of confrontations between Democrats and Republicans early next year.
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