While you were sleeping: Stocks hit records
Aug 2 (BusinessDesk) – Wall Street climbed to fresh records amid central bank promises for ongoing stimulus and
better-than-expected economic data from the US and abroad.
A day after US Federal Reserve policy makers said they plan to maintain their asset purchases to help propel the pace of
economic recovery, their counterparts at the European Central Bank said they too will hold to their efforts to bolster
growth.
"Recent confidence indicators based on survey data have shown some further improvement from low levels and tentatively
confirm the expectation of a stabilisation in economic activity," ECB President Mario Draghi said in a statement
following the bank's meeting. "Our monetary policy stance will remain accommodative for as long as necessary."
The ECB kept its key interest rate at 0.5 percent.
"The Governing Council confirms that it expects the key ECB interest rates to remain at present or lower levels for an
extended period of time," he said.
The Bank of England also kept its benchmark rate at 0.5 percent and maintained its bond-buying target at 375 billion
pounds.
The latest US economic data surpassed forecasts and boosted sentiment on the outlook. Weekly initial jobless claims data
showed a drop of 19,000 to a seasonally-adjusted 326,000, the lowest level since January 2008. The report beat
expectations, just as the ADP employment data did earlier this week.
That bodes well for tomorrow's monthly government payrolls data. The economy added 185,000 jobs in July, according to
the median forecast in a Bloomberg survey, while the jobless rate may have declined to 7.5 percent last month.
Separately, the Institute for Supply Management's index of national factory activity rose to 55.4 in July, the highest
level in two years, while Markit's final US Manufacturing Purchasing Managers Index increased to 53.7 in July, the
highest since March.
"The future growth outlook remains on a highly positive trajectory, keeping the September tapering timeline firmly
intact despite the Fed's nod to below-target inflation," Gennadiy Goldberg, an economist at TD Securities in New York,
told Reuters.
In late afternoon trading in New York, the Dow Jones Industrial Average climbed 0.93 percent, the Standard & Poor's 500 Index rose 1.17 percent and the Nasdaq Composite Index gained 1.16 percent. Earlier in the session the Dow
hit a record high 15,650.69, while the S 500 touched a record 1,706.21.
Gains in shares of American Express, Bank of America and Hewlett-Packard propelled the Dow.
In Europe, the Stoxx 600 Index rallied 1.2 percent from the previous close. The UK's FTSE 100 increased 0.9 percent,
while France’s CAC 40 climbed 1.3 percent and Germany’s DAX jumped 1.6 percent.
Markit's Eurozone Manufacturing PMI climbed to a two-year high of 50.3 in July, up from 48.8 in June, pointing to growth
for the first time since July 2011.
"Rising export demand and stabilising domestic markets took growth of new orders and output to rates, albeit still
modest, last scaled in mid-2011," Rob Dobson, senior economist at Markit, said in a statement. "This hopefully places
the sector nicely to provide a positive spur to the third quarter GDP numbers and help the euro area exit recession."
(BusinessDesk)