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There is a lack of clear direction to the stock market today that matches the lack of clarity regarding the Fed’s intentions, despite a succession of speeches from Fed officials this week.
Stocks moved into the red in the morning on Wall Street, but managed to turn things around by the afternoon. By early afternoon in New York, the Dow had risen 0.11% to 15,417 and the S&P 500 had gained 0.26% to 1706.3.
New York Fed President William Dudley signalled yesterday that he opposes tapering until the economy has recovered further, GDP needs to rise further to spur jobs growth.
Richard Fisher, President of the Dallas Fed, argued the other way in a speech in San Antonio, also yesterday, saying that the decision to maintain stimulus undermines the Fed’s credibility and heightens uncertainty. I’d possibly agree with the latter notion, but for the Fed to say the decision was economic dependent, then not taper when certain data was soft would have been more damaging to the Fed’s credibility in my mind. Mr Fisher is not a voting member of the FOMC in 2013, but will be a voting member next year.
Data continues to show softness, with consumer confidence sinking to 79.7 in September from the 81.5 seen last month, and the Richmond Fed manufacturing survey unchanged this month, after a bullish reading of 14 in August. The consensus estimate had been for the survey to come in at 10.5. Following on from yesterday’s disappointing PMI, it suggests the manufacturing sector is facing some headwind.