While you were sleeping: US economic data underpin stock rally
By Margreet Dietz
US economic data underpin stock rally
A Commerce Department report showed factory goods orders rose a better-than-expected 1.2 percent in August, while a
separate Commerce Department report showed the US trade deficit shrank to the lowest level in nearly a year.
Meanwhile, a Labour Department report showed initial claims for unemployment benefits fell 12,000 to a seasonally
adjusted 260,000 for the week ended September 30.
Another Labour Department report, due Friday, is expected to show nonfarm payrolls increased by 90,000 jobs in
September, following a gain of 156,000 in August, according to a Reuters survey of economists.
“We are continuing to get good economic news globally, specifically out of the US,” Kim Forrest, senior equity research
analyst at Fort Pitt Capital Group in Pittsburgh, told Reuters. “It looks like the US economy continues to expand and
that is what is driving today.”
Meanwhile, Federal Reserve Bank of San Francisco President John Williams underpinned bets for higher interest rates.
"These favourable employment numbers, combined with the findings on inflation and the steady pace of growth, are all
behind my confidence that rates will need to rise to their new normal levels," Williams said in prepared remarks for a
speech in St Louis, Missouri.
Separately, Philadelphia Fed President Patrick Harker told CNBC he’s “pencilled in” an interest rate increase in
December as well as three hikes next year.
In 2.12pm trading in New York, the Dow gained 0.4 percent, while the Nasdaq Composite Index climbed 0.6 percent. In
1.57pm trading, the Standard & Poor’s 500 Index rose 0.5 percent.
The Dow moved higher, led by gains in shares of Goldman Sachs as well as those of Microsoft and JPMorgan Chase, recently
up 2.4 percent, 1.7 percent, and 1.5 percent respectively.
The Dow rallied to a record 22,769.57, while the S 500 vaulted to a record 2,551.74, and the Nasdaq touched a record 6,577.51.
US Treasuries declined, sending yields on the 10-year note two basis points higher to 2.35 percent.
“The data we’ve had has been pretty good and again hawkish—better than the inflation data we got with the PCE data last
week,” Michael O’Rourke, chief market strategist at JonesTrading Institutional Services, told Bloomberg. “There’s more
re-pricing necessary in bonds, especially considering we’re seeing pretty good economic data that’s definitely going to
keep the Fed on course.”
Shares of Constellation Brands climbed to a record after the US beer, wine and spirits company whose brands include
Corona posted quarterly earnings that exceeded expectations and upgraded its full-year outlook because of strong results
in its beer business.
The company lifted its full-year comparable earnings forecast to a range of US$8.25 to US$8.40 per share, up from
previous guidance for US$7.90 to US$8.10 per share, it said in a statement.
“During the quarter, we gained market share, improved margins, continued to generate strong free cash flow and executed
exceptionally well," Chief Financial Officer David Klein said in a statement. "These results are driving the upward
revision to our EPS estimate for the year.”
Shares of Constellation Brands rallied, up 3.4 percent at US$208.05 as of 1.08pm in New York. The stock touched a record
high US$213.40 earlier in the day.
In Europe, the Stoxx 600 Index ended the session with a 0.2 percent gain from the previous close. France’s CAC 40 Index
rose 0.3 percent, while the UK’s FTSE 100 Index advanced 0.5 percent.
Germany’s DAX Index inched 0.02 percent lower.
(BusinessDesk)
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