The Down Jones Industrial Average (DJIA) and the S&P 500 ended the trading session on a high note on Wednesday. The momentum in the stock markets was driven by comments from Federal Reserve officials that continued stimulus is necessary to support the economy.
Yesterday, members of the Federal Reserve Board released two different papers indicating that a loose monetary policy is required to support the economic growth of the United States. William English, head of the Division of Monetary Affairs expressed his support for the strategy of the Federal Reserve to maintain low interest rates as long as the unemployment rate is higher than 6.5% while David Wilcox, director of the Division of Research & Statistics said a “highly accommodative monetary policy” is needed given the weakness of the economy.
Commenting on the reports of the policymakers, Jan Hatzius, chief economist at Goldman Sachs Group Inc (NYSE:GS) said, “Our initial assessment is that they considerably increase the probability that the FOMC will reduce its 6.5 percent unemployment threshold for the first hike in the federal funds rate.”
The Conference Board reported that the index of U.S. leading indicators increased 0.7% in September compared with 0.6% average estimate of economists surveyed by Bloomberg.
Economists are expecting that the employers in the country added fewer jobs in October. The Department of Commerce is scheduled to release the employment data on Friday. They are projecting a 2% growth in gross domestic product (GDP) compared with the 2.5% GDP growth in the second quarter.
According to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, the backdrop for stock is encouraging because of the fact that the third quarter earnings season is generally positive, the sentiment of investors is constructive, valuations are fair, and continued expectations that the Federal Reserve will maintain its bond-buying program until March next year. He added, “In the absence of bad news, the path of least resistance for equities is up.”
U.S. Markets
- Dow Jones Industrial Average (DJIA)- 15, 746.88 (+0.82%)
- S&P 500- 1,770.49 (+0.43%)
- NASDAQ- 3,931.95 (-0.20%)
- Russell 2000- 1,098.63 (-0.45%)
European Markets
- EURO STOXX 50 Price EUR- 3,056.40 (+0.67%)
- FTSE 100 Index- 6,741.69 (-0.08%)
- Deutsche Borse AG German Stock Index DAX- 9,040.87 (+0.35%)
Asia Pacific Markets
- Nikkei 225- 14, 337.31 (+0.79%)
- Hong Kong Hang Seng Index- 23,036.94 (-0.01%)
- Shanghai Shenzhen CSI 300 Index- 2, 353.57 (-1.27%)
Stocks in Focus
The stock price of Halliburton Company (NYSE:HAL) increased 2.39% to $54.40 per share after the company raised its dividend by 20% to $0.15 cents per share. Halliburton CEO David Lesar stated that the company is expected to buy back more shares. The company repurchased 68 million shares worth $3.3 billion in the third quarter.
Microsoft Corporation (NASDAQ:MSFT) gained 4.20% to $38.18 per share after Rick Sherlund, analyst at Nomura Holdings, recommended a Buy rating and raised his price target for the stock to $50 per share. He also predicted that Ford’s CEO Allan Mulally will replace Steve Ballmer.
The stock value of Ralph Lauren Corp (NYSE:RL) climbed 5.45% to $180.52 after the company increased its sales forecast and dividend. The company reported $2.23 earnings per share on $1.92 billion revenue for its fiscal second quarter.
