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A day after the Fed decided to scale back its stimulus, the decision is looking justified, with Wall Street toasting solid GDP growth, a high level of consumer spending and a clutch of upbeat quarterly reports, including stellar results from Facebook. The social media behemoth rocketed up 14.6% after reporting a steep increase in revenue.
As long as the volatility remains elevated in emerging markets the potential for investors to be unnerved will persist, but the US economy is unlikely to be tainted even if emerging markets continue to slide.
3.2% growth for the economy at a time when the government was tightening its belt with its fiscal expenditure is an impressive outcome, the news of which has been a major part of today's gains. With a few minutes to the close, the Dow was up 0.71% or 112 points at 15,851, while the S&P 500 gained 1.1% to 1794.2.
The major US index benchmarks have had a bad month, with a negative monthly performance despite today’s bounce, the first monthly loss since the end of last summer, but the strength of today’s earnings really changes the complexion of the whole earnings season so far. This will raise hopes that January’s weakness will not set a trend for the rest of the year.
Tomorrow we have December data for US personal incomes and outlays, the Chicago PMI and the final reading of the University of Michigan’s index of consumer sentiment for January. On the earnings front we will hear from Dow component Chevron as well as Mastercard, among others.