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The Dow climbed back above the 16,000 mark late today, standing at 16,003 with under an hour to the final bell on Wall Street, a gain of more than 100 points. The S&P 500 has advanced even further today on a percentage basis, rising 0.83% to 1796.15.
JP Morgan led gains in the Dow, rising around 2%, following yesterday’s $13 billion settlement with US regulators over misselling mortgage securities. Although the settlement will weaken the company’s balance sheet, it does draw a line under the issue, removing the uncertainty so disliked by investors. Perhaps related to the record fines it has incurred, the banking giant plans to maintain employees’ pay at broadly the same levels as last year, according to a report today by Reuters, which would put the company at the low-end of the pay scale for Wall Street banks.
As usual, the overall stock market remains influenced by expectations of how the Fed might proceed with its quantitative easing programme. Fears that the Fed might be prepared to introduce a reduction in stimulus imminently were alleviated somewhat today by comments made by Richmond Fed President Jeffrey Lacker in a Q&A session following a speech.
Mr Lacker said in the speech that he has ‘not been in favor of the current asset purchase program’ yet when answering questions revealed that he thought January through March would be a sensible timeframe to begin tapering. He also acknowledged in his speech that he has lowered his GDP growth estimates for 2013 from where he saw them earlier in the year (Mr Lacker is not currently a voting member of the FOMC).
Perennial Fed hawk Esther George speaks tomorrow in Paris on banking supervision.