Yesterday we saw the Dow close above 16,000 for the first time. Today, the Dow has edged higher to set a new intraday record of 16,036.22, while the S&P 500 is on course to close above 1800, which has never happened before.
By early afternoon in New York, the Dow was up 0.12% or 19 points at 16,029, while the S&P 500 gained 0.31% to stand at 18001.5. The Dow’s gains come in spite of a hefty fall in the share price of Intel, with the company having one of the lowest weightings in the index.
Intel has dropped more than 5% today, following the chip maker’s annual investor day which took place yesterday. CEO Brian Kaznich said at the conference that PC sales will probably decline next year, losing market share to tablets, and that Intel’s revenues will not grow in 2014 as a result. Intel has struggled to keep pace with some of its rivals in providing processors suited to smartphones and tablets.
News has been slight in terms of significant economic releases, as well as on the Fed front. We’ve heard snippets from various Fed officials this week, sometimes ambiguous, and there was very little given away by Kansas City Fed head Esther George, who spoke on bank supervision in Paris today, or by Atlanta Fed President Dennis Lockhart, who gave an interview on CNBC.
Ms George has voted against stimulus at every given opportunity this year, but said little regarding tapering today, beyond mentioning to reporters after the speech that it was in consideration.
Mr Lockhart, meanwhile, who doesn’t have a vote at FOMC meetings this year, said he also expects tapering to be discussed at upcoming meetings. This isn’t saying much, as we know the Fed has explicitly said the decision is data-contingent which, by definition, means a decision cannot have been made yet and will therefore need to be discussed at the next meeting. Lockhart acknowledged that the economy has not improved as much as the Fed had anticipated for the second half of 2013.
The euro has held on to gains sparked earlier by data showing confidence rising among German business executives last month. EUR/USD was up 0.51% at 1.3550 by mid-afternoon in New York, while sterling dropped 0.44% against the shared currency. The Ifo’s business climate index for Germany showed its highest reading since April, backing up the Bundesbank’s comments earlier this week that Germany’s economic health is on a solid growth path.
Such bullish signs for the biggest economy in the Eurozone has helped alleviate concerns that the ECB might have to ease further.