S&P 500 soars above 1,700 on Fed, US data
The Standard & Poor’s 500 joined the other benchmark indices on their way to the top Thursday following several high profile data releases. The S&P 500 broke the 1,700 barrier, as ten of its main industries advanced. The S&P edged up more than 1.2 percent to close the New York session at 1,706.87. The NASDAQ Composite also advanced more than 1.3 percent to close at 3,675.74. The Dow Jones Industrial Average erased its previous day’s losses by closing on a gain of 0.83 percent (15,628.02).
According to the US Department of Labor, 326,000 people filed jobless claims last week, compared to 343,000 the previous week. The figure beat the expectations of Bloomberg economists, who projected a total of 345,000 jobless claims. The better-than-expected jobs reports over the past two days raise the bar for the official nonfarm payroll count, as well as for the July unemployment rate, both of which come our way Friday.
The second indicator to make headlines Thursday was manufacturing PMI for the month of July. Two PMI readings were released Thursday, one by Markit Economics and the other by the Institute of Supply Management. Both indices beat expectations. The Markit report showed a reading of 53.7, while the ISM report showed a reading of 55.4, which suggest improving business conditions in US manufacturing industries. US manufacturing has been supported by surging home sales. The sale of new homes in June reached its highest level in five years.
The US stock market received support Wednesday following the latest round of policy meetings held by the Federal Open Market Committee. The Federal Reserve expressed cautious optimism about the current state of economic recovery, vowing to keep its monthly asset purchases intact in an effort to reach its inflation targets. The central bank has been under the spotlight since May, when Federal Reserve Chairman Ben Bernanke first suggested bond tapering could begin as early as this year.
The Fed’s outlook on recovery assured investors tapering was not on the table for the time being. The stock markets have been a primary benefactor of US stimulus that has over the past three cycles injected more than $3.5 trillion into the markets.
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