U.S. equities recouped $1 trillion of share value that was erased in the last seven weeks, as Federal Reserve Chairman Ben S. Bernanke pledged to preserve stimulus and stocks rallied on signs of economic expansion.
Yesterday’s 1.4 percent gain wiped out losses for the Standard & Poor’s 500 Index that had swelled to as much as 5.8 percent in the month after Bernanke raised the prospect of slowing bond purchases. Stocks rose in 10 of the last 12 days. Target Corp. (TGT), Boeing Co. and 131 other companies are trading at 52-week highs, almost three times the average at four S&P 500 peaks between 1990 and 2007, data compiled by Bloomberg show.
Investors who had been putting aside concern U.S. policy makers will reduce stimulus kept buying this week after Bernanke said “highly accommodative monetary policy for the foreseeable future is what’s needed.” While bears say the rally won’t survive earnings reports that analysts estimate will be among the weakest in four years, bulls say an expanding economy ensures that future profits will rise and lift stocks.
“The realization is sinking in that the only way there is going to be a Fed tapering by the middle of next year is if there is consistent economic improvement,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a July 8 phone interview. “If there isn’t, the Fed support is going to remain there. If there is a strengthening in the economy, the Fed will pull back. That is a net-positive for stocks, not a net-negative.”
Read more @ Bloomberg.com
© anu for Royal Times of Nigeria Newspaper, 2013. |
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