While you were sleeping Jobless claims lift Wall Street

Friday 22nd November 2013

Wall Street rose amid better-than-expected jobs data, with investors looking to the signs of recovery in the US economy as a positive for corporate profits.

Initial claims for state unemployment benefits declined 21,000 to a seasonally adjusted 323,000, while a separate Labor Department report showed the seasonally adjusted producer price index fell 0.2 percent in October.

Markit's preliminary US Manufacturing Purchasing Managers Index climbed to the highest level in eight months, rising to 54.3 in November, up from 51.8 in October.

The latest data come a day after minutes of the latest US Federal Open Market Committee meeting showed that policy makers might start tapering their bond-buying programme as soon as their next meeting in December.

"They generally expected that the data would prove consistent with the committee's outlook for ongoing improvement in labour market conditions and would thus warrant trimming the pace of purchases in coming months," according to the FOMC minutes released yesterday.

In afternoon trading in New York, the Dow Jones Industrial Average climbed 0.53 percent, while the Standard & Poor's 500 Index increased 0.64 percent, and the Nasdaq Composite Index added 0.94 percent. Gains in shares of JPMorgan Chase and UnitedHealth paced the rise in the Dow, up 2 percent and 1.6 percent respectively.

"The minutes of yesterday's FOMC got the market thinking maybe tapering is closer than anybody thought," Ray Remy, head of fixed income in New York at Daiwa Capital Markets America, one of 21 primary dealers that trade with the Fed, told Bloomberg News.

Even so, investors have been reassured that the Fed is not about to crimp the easy money supply any time soon, even if it does taper.

"For a long time we have been focused on nothing but the Fed, but the Fed has differentiated well enough between taper and tighten," Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire, told Reuters. "In that environment, good news becomes good news and the market should react strongly to positive economic data and jobs numbers."

Meanwhile, Fed Vice Chairman Janet Yellen moved one step closer to succeeding Fed Chairman Ben Bernanke at the end of his term on Jan. 31, when a Senate committee approved her nomination. A full Senate vote is now expected in December.

It was not all good news for investors. Shares of department store chain Target dropped, last down 3.9 percent, after the company downgraded its full year profit forecast.

In Europe, the Stoxx 600 Index slipped 0.2 percent. France's CAC 40 fell 0.3 percent. Germany's DAX and the UK's FTSE 100 Index barely budged from the previous close.

BusinessDesk.co.nz

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