While you were sleeping S and P 500 at new record on stimulus bets

Wednesday 30th October 2013

The Standard & Poor's 500 Index rose to a new record on expectations the Federal Reserve will maintain its massive stimulus programme amid signs the world's biggest economy is stumbling.

The S&P 500 gained 0.4 percent to 1769.21 and the Dow Jones Industrial Average rose 0.6 percent to 15668.05. In Europe, the FTSEurofirst 300 index was up 0.4 percent.

As the Federal Open Market Committee began its two-day meeting, more economic data showed the US economy's pace is far from robust. Retail sales fell 0.1 percent in September, driven by a drop in car sales, Commerce Department figures showed. Excluding autos, sales gained 0.4 percent.

A separate Labor Department report showed the producer price index fell 0.1 percent, led by food prices, while consumer confidence recorded its biggest decline in two years this month, based on the Conference Board index, which fell to 71.2 from 80.2 in September. Those reports followed figures this week showing weaker than expected factory production and sales of existing homes.

The US dollar strengthened to 98.17 yen and climbed to $1.3739 per euro on expectations the Fed will retain its US$85 billion a month of bond buying. The Dollar Index rose about 0.5 percent to 79.634.

"Ahead of the FOMC, people might be a bit more prudent and reducing risk positions," Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York, told Bloomberg. "The foreign-exchange market in general is more reticent to take on risk than the stock market."

Pfizer, the world's biggest drugmaker, helped lift the Dow, gaining 1.7 percent after reporting better-than-expected third-quarter earnings on sales of cancer drugs.

Apple dropped 1.1 percent after saying gross margins will be 36.5 percent to 37.5 percent, below analysts' expectations of 38 percent.

Google climbed 1.4 percent and is up 45 percent this year. Bloomberg reported that Brazilian President Dilma Rousseff has ordered lawmakers to halt legislative proceedings to focus of a plan to force online service providers such as Google to keep local-user information in data centers within the country.

The move follows revelations America's National Security Agency has spied on foreign leaders including Rousseff. Brazil is the third-largest market for Google's Android smartphone software, the report said.

JPMorgan Chase fell about 0.3 percent. Reuters reported that the firm's US$13 billion draft settlement deal with the Department of Justice was stumbling because of its demands to shut down most criminal inquiries into its mortgage bond business.

Gold fell as the greenback's strength sapped demand for the precious metal as an alternative investment. Gold for December delivery fell 0.5 percent to US$1,345.50 an ounce on the New York Mercantile Exchange, having reached a five-week high the previous day.

West Texas Intermediate crude oil fell on speculation US inventories are rising. WTI for December delivery fell 0.5 percent to US$98.23 a barrel. A Bloomberg survey showed analysts expect stockpiles rose for a sixth straight week, last week. The Energy Information Administration data is released on Wednesday.

Brent crude for December declined 0.5 percent to US$109.07 a barrel in London.

BusinessDesk.co.nz

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