The stock markets in the United States extended gains today driven by positive forecasts by the World Bank regarding the recovery of the global economy.
The World Bank’s Global Economics Prospects report indicated that global economy will grow this year to 3.2% from 2.4% in 2012. The report also estimated that the global economic growth in 2015 will be around 3.4%.
The World Bank raised its growth forecast for developed countries from 2% to 2.2%. The report indicated that the United States is growing faster than its fellow developed countries, and its economy is two times stronger than Japan. The strong momentum of the United States and other developed nations is expected to support a stronger growth for the economies of developing nations.
Kaushik Basu, chief economist at World Bank said, “It’s a strange world we live in that news that an uneventful economy ahead of us is meant to be good news.” He added that the global economic growth is not surprising after years of economic turmoil.
On the other hand, Christine Lagarde, managing directors at the International Monetary Fund (IMF) said the momentum of the global economy in the second half of 2013 will continue this year due to the improvement of advanced economies. She added, “Now that the global economy looks more stable, the big priority for policymakers in 2014 is to fortify the feeble global recovery.”
Meanwhile, the Federal Reserve said the moderate growth across the country in December was driven by increased consumer spending during the holiday season, improvement in the labor market, and expansion of manufacturing sector.
“The economic outlook is positive in most districts, with some reports citing expectations of ‘more of the same’ and some expecting a pickup in growth,” according to the Federal Reserve Beige Book survey.
Commenting in the momentum of the stock markets, Jim Welsg, market strategist at Forward Management LLV told Bloomberg, “When most of the averages are making new highs together, that shows that the overall market is in a pretty good shape. The odds favor, that there will be another rally to one more new high by the end of the first quarter.”
- Dow Jones Industrial Average (DJIA)- 16,481.94 (+0.66%)
- S&P 500- 1,848.38 (+0.52%)
- NASDAQ- 4,214.88 (+0.76%)
- Russell 2000- 1,171.31 (+0.68%)
- EURO STOXX 50 Price EUR- 3,168.76 (+1.58%)
- FTSE 100 Index- 6,819.86 (+0.78%)
- Deutsche Borse AG German Stock Index DAX- 9,733.81 (+2.03%)
Asia Pacific Markets
- Nikkei 225- 15,808.73 (+2.50%)
- Hong Kong Hang Seng Index- 22,902.00 (+0.49%)
- Shanghai Shenzhen CSI 300 Index- 2,208.94 (-0.18%)
Stocks in Focus
The stock price of Apple Inc. (NASDAQ:AAPL) gained 2% to $557.35 per share after China Mobile Ltd (ADR) (NYSE:CHL) reported that its pre-order for iPhones hit more than one million. The iPhone and iPad maker also settled the complaint of the Federal Trade Commission (FTC) regarding its failure to implement measures to stop children from making purchases on mobile apps without the consent of their parents. The tech giant agreed to pay a penalty of $32.5 million to refund all unauthorized charges.
The shares of Bank of America Corp (NYSE:BAC) gained 2.27% to $17.15 per share reporting better-than-expected fourth quarter earnings and revenue. The bank’s net income increased from $732 million to $3.43 billion or $0.03 to $0.29 per diluted common share. Its global banking revenue increased by 9% to $4.3 billion.
On the other hand, the stock price of Tesla Motors Inc (NASDAQ:TSLA) rose almost 2% to $164.13 per share today after its CEO Elon Musk said the electric car manufacturer will deliver its first Model S vehicle in China by March. Yesterday, the stock gained 16% after reporting that it delivered 6,900 Model S cars in the fourth quarter.