Stocks rallied for a third consecutive day on Thursday on a slew of modest but positive economic data as well as continued reassurances from Federal Reserve officials about the future of the U.S. central bank’s role in holding up the economy.
The S&P 500 was up 0.62 percent to 1,613.2, while the Dow jumped 0.77 percent to 15,024.49 and the Nasdaq ended the day on an advance of 0.76 percent to close at 3,401.86 points.
Markets went into a near-panic last week after Fed Chairman Ben Bernanke floated a very convincing trial balloon about a time-frame for the eventual reduction of the $85 billion a month fiscal stimulus program that has been seen as instrumental in the gains that stocks have made in 2013. Though the Chairman made it clear that the end of quantitative easing would be contingent upon the U.S. economy’s lining up with the Fed’s inflation and unemployment targets, stocks proceeded to tumbled from May’s all-time highs as investors braced themselves for a significant correction.
This week, numerous regional Federal Reserve Bank presidents have been in damage control mode. On Thursday, New York Fed president William Dudley signaled that the central bank’s purchases could get even more aggressive in the event that the economy didn’t improve according to expectations, while Fed board governor Jerome Powell said that markets had overreacted to the Chairman’s comments.
President of the Atlanta Fed Dennis Lockhart was more or less in lockstep with the messaging, saying that the time and pace of the dreaded tapering of QE was not predetermined, and was wholly dependent on economic developments.
Meanwhile, the economic data was encouraging with figures showing that personal income for the month of May was up 0.5 percent, ahead of expectations of an increase of 0.2 percent, while jobless claims fell to 346,000 in line with analyst expectations. Home sales for the month of May increased 6.7 percent, leaping well beyond the 1 percent month-to-month increase that had been expected.
Leading stocks on the S&P 500 for the day included Cablevision Systems Corporation (CVC), J.C. Penney (JCP), with ConAgra Foods Inc. (CAG) in tow, up 5 percent after reporting solid earnings and promising guidance earlier in the day. Most of the Dow’s components were in the positive as well, with Hewlett-Packard (HPQ) up 3.17 percent, and Boeing (BA) advancing 2.4 percent to $103.15.
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