There are growing speculations that the Federal Reserve will suspend tapering its quantitative easing or bond-buying program after lawmakers passed a budget legislation ending the shutdown and funding the government until January 15, as well as extending the borrowing limit until February 7. This sent the stock markets higher on Friday.
Charles Evans, president of Federal Reserve Bank of Chicago said, “We need more information about how the economy is proceeding, how we are going to weather the most recent government shutdown. I think the most likely outcome is one where we continue to go for a couple of meetings to assess this.”
According to Evans, the $85 billion bond-buying program of the Federal Reserve should continue until they are confident that there is a sustainable improvement in the labor market. He emphasized, “It is not yet time to remove accommodation.” He added that it’s worth it to speculate whether the tapering will be done in December or the following months because policy makers need to evaluate the economic situation.
On the other hand, Richard Fisher, president of the Federal Reserve Bank of Dallas said, “Given all this uncertainty it would be hard for me even to argue a change in course of monetary policy. I don’t like the course we’re on… but my view will be to stay the course at the next meeting.”
The employment data from the Department of Labor for the month of September will be released on October 22. The original schedule for the release of the jobs report was last October 4, but it was delayed because of the shutdown. The home sales data will be out on October 21.
Sarah Hunt, associate fund manager at Alpine Woods Capital Investors, told Bloomberg, “People are looking at earnings but they’re also looking at what they think is going to happen next. After this political problem, no one is expecting this to happen again in January. People are just looking for a little bit of a better economic backdrop to continue what’s been a pretty decent environment for stocks.”
U.S. Markets
- Dow Jones Industrial Average (DJIA)- 15, 397.08 (+0.17%)
- S&P 500- 1,744.34 (+0.65%)
- NASDAQ- 3,914.28 (+1.32%)
- Russell 2000- 1,110.90 (+0.78%)
European Markets
- EURO STOXX 50 Price EUR- 3, 033.31 (+0.76%)
- FTSE 100 Index- 6,622.58 (+0.71%)
- Deutsche Borse AG German Stock Index DAX- 8,865.10 (+0.60%)
Asia Pacific Markets
- Nikkei 225- 14,561.54 (-0.17%)
- Hong Kong Hang Seng Index- 23,340.10 (+1.06%)
- Shanghai Shenzhen CSI 300 Index- 2, 426.05 (+0.53%)
Stocks in Focus
The stock price of Chipotle Mexican Grill, Inc. (NYSE:CMG) gained 15.78% to $508.37 a share after reporting solid financial results with a $826.9 million revenue and $2.66 diluted earnings per share. Wall Street analysts projected that the company will report $2.78 earnings per share on $820 million revenue. Chipotle’s management plans to open 165-180 new restaurants this year and to achieve mid-single digit comparable restaurant sales.
General Electric Company (NYSE:GE) climbed 3.61% to $25.57 a share after reporting a 13% increase in backlog orders, which overshadowed its weak financial results. GE chairman and CEO Jeff Immelt issued a bullish statement saying that the conglomerate is very strong in improving its global business. Seven of the industrial businesses of GE reported increased earnings. Overall, the company reported a net income of $3.19 billion, or $0.31 earnings per share (EPS) on $35.7 billion revenue. The company’s EPS declined by $0.02 from $0.33 in the same period last year.
The stock value of Google Inc (NASDAQ:GOOG) hit the $1,000 mark after reporting better-than-expected financial performance for the third quarter. The shares of the search engine giant ended trading session this week at $1,001.41 per share, up by 13.80%.
Meanwhile, the shares of UnitedHealth Group Inc. (NYSE:UNH) continue to go down. The stock fell another 3.66% to $68.76 per share on Friday. The stock was affected by ObamaCare’s cuts on Medicare payments. The company reported $1.53 earnings per share on $30.6 billion revenue in the third quarter.
