Dow approaches record high as Fed meeting begins
NEW YORK, USA
INVESTORS pushed stocks higher yesterday and drove the Dow Jones industrial average close to an all-time closing high on expectations that the Federal Reserve will keep its economic stimulus programme in place.
Following a 16-day partial shutdown of the US government, economists are doubtful that the Fed will begin winding down its US$85 billion monthly bond-buying programme until at least next year.
The budget showdown in Washington rattled consumer confidence and likely crimped economic growth.
“The reduction of their bond buying seems to be moving off to be a 2014 event,” said Cam Albright, director of asset allocation at Wilmington TrUSt Investment Advisors.
The Fed’s policy is aimed at keeping long-term interest rates low. That benefits US companies by helping them to borrow cheaply and increase their earnings. The programme has also helped push the stock market to record highs.
About half the companies in the Standard and Poor’s 500 have reported earnings. So far, most are doing better than investors expected. Companies in the index are forecast to log third-quarter earnings growth of 4.5 per cent, according to data from S&P Capital IQ.
As of Tuesday afternoon, the Dow Jones industrial average rose 102 points, or 0.7 per cent, to 15,671. The index is just five points below its record close from September 18. It got a boost from IBM, which announced that it would increase the purchases of its own stock by US$15 billion.
IBM rose US$4.15, or 2.3 per cent, to US$181.27, accounting for about a quarter of the Dow’s gain.
The S&P 500 index rose eight points, or 0.5 per cent, to 1,770 as of 2:10 p.m. (1810 GMT). The index is on track to close at a record high for a seventh day this month.
The Nasdaq composite rose 10 points, or 0.3 per cent, to 3,949.
The Nasdaq Stock Market was hit with a technical problem. Nasdaq indexes weren’t updated from 11:53 am to 12:37 pm because of a technical problem that was caused by “a human error,” the exchange operator said in a statement. Trading of Nasdaq-listed stocks wasn’t affected, it said.
The technical glitch was the latest to hit the Nasdaq.
On September 4, the Nasdaq had a brief outage in one of its quote dissemination channels, which are USed to provide real-time price quotes on stocks, but trading wasn’t affected. On Aug. 22 the exchange suffered a three-hour trading outage that was also attributed to problems with the exchange’s price disseminating system.
Lacklustre reports on US retail sales and consumer confidence couldn’t slow stocks yesterday.
Retail sales fell 0.1 per cent in September, the weakest showing since March, as auto sales dipped.
Americans’ confidence in the economy fell this month to the lowest level since April. People were worried about the impact of the government shutdown.
