The stock markets in the United States ended the week higher amid investors’ growing speculations that the Federal Reserve will maintain its $85 billion monthly bond-buying program based on the statements of Vice Chairman Janet Yellen during her confirmation hearing at the Senate to replace Chairman Bernanke.

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Yesterday, Yellen emphasized that it is necessary to continue the stimulus to support the growth of the economy, which she describe as still “fragile.” She also said that the interest rates will remain low.  The latest data from the Census Bureau indicated that the total industrial production in the United States declined 0.1% for the month of October. Data showed that the output of mines and utilities sectors dropped while the output of factories was higher than expected.

“The combination of earnings growth and expanded PE due to investors feeling better about things just continues to move the market higher,” said John Fox, director of research at Fenimore Asset Management during a phone interview with Bloomberg. He added that Yellen’s statement that the central bank will maintain the implementation of low interest is positive for equities.

Thomas Lee, chief U.S. equity strategist at JP Morgan Chas & Co. (NYSE:JPM) commented, “The U.S. is in a secular bull market and remaining constructive on equities is warranted.” He believed that corporate earnings will improve due to increasing demands in different sectors such as automobile and housing.

Data from Bloomberg showed that 75% out of the 461 companies in the S&P 500 that already reported quarterly earnings that beat the consensus estimate of Wall Street analysts.

Dan Veru, chief investment officer at Palisade Capital Management opined, “Markets will grind higher as an accommodating Fed Reserve offsets anti-growth policies from Washington unless we get some extraordinary external bolt [from the blue].”

Economists projected that the Federal Reserve could start reducing its monthly stimulus to $70 billion in March next year.

U.S. Markets

  • Dow Jones Industrial Average (DJIA)- 15, 950.71 (+0.47%)
  • S&P 500- 1,796.76 (+0.34%)
  • NASDAQ- 3,984.06 (0.28%)
  • Russell 2000- 1,115.73 (+0.39%)

European Markets

  • EURO STOXX 50 Price EUR- 3,054.53 (+0.03%)
  • FTSE 100 Index- 6,693.44 (+0.41%)
  • Deutsche Borse AG German Stock Index DAX- 9,168.69 (+0.21%)

Asia Pacific Markets

  • Nikkei 225- 15, 165.92 (+10.95%)
  • Hong Kong Hang Seng Index- 23,032.15 (+1.69%)
  • Shanghai Shenzhen CSI 300 Index- 2, 350.73 (+2.01%)

Stocks in Focus

The stock price of Agilent Technologies Inc. (NYSE:A) rose almost 9% to $55 per share after reporting better-than-expected fourth quarter financial performance. The maker of testing equipment for electronics and medical devices reported $0.81 earnings per share on $1.72 billion revenue compared with the consensus estimate of Wall Street analysts of $0.76 earnings per share and $1.71 billion revenue.

The shares of Fannie Mae/ Federal National Mortgage Association (OTCBB:FNMA) increased by more than 10% to $3.38 per share while Freddie Mac/ Federal Home Loan Mortgage Corp (OTCBB:FMCC) rose nearly 9% to $3.15 per share. Both stocks were lifted by reports that Pershing Square Capital Management LP, the hedge fund managed by activist investor Bill Ackman, acquired an almost 10% stake in each of the mortgage giants. Ackman plans to engage in discussions with the management and shareholders of Fannie Mae and Freddie Mac as well as with the U.S. government.

FedEx Corporation (NYSE:FDX) gained almost 1.3% to $138.32 on reports that hedge fund managers George Soros and John Paulson purchased huge stakes in the company. Based on regulatory filings, Soros Fund Management LLC and Paulson & Co. acquired $173 million and $73.8 million worth of FedEx shares, respectively.

The stock value of Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) gained more than 12% to $14.63 per share after the advisory committee of the U.S. Food and Drug Administration (FDA) recommended the approval of Hetlioz, an experimental drug intended to regulate the circadian rhythms of blind individuals to help them sleep. Oreb Livnat, analyst at Jefferies reiterated a Buy rating with a $20 price target for the stock. The analyst believes that Hetlioz has a “minimal approval risk.”