Dow breaks above 16,000 on jobs optimism

The strength of today’s economic data has caused a broad rally on Wall Street, with investors apparently shrugging off concerns that the Fed could taper sooner rather than later.

The major US stock index benchmarks have broken back above key psychological levels today, with the Dow reclaiming the ground above 16,000 and the S&P 500 crossing 1800. After struggling all week, it is quite a dramatic turnaround, with the S&P 500 now flirting with making overall gains for the week.

With less than half an hour of trading remaining, the Dow was up 1.13% at 16000, while the S&P was up 1.04% at 1803.5.

Data released today suggests consumer sentiment has turned around, rising at a key moment in the year when retailers look for a bump in sales over the Festive shopping season. Along with the advances shown in the November employment report, this should help the US economy to grow at an increased pace.

I still think with inflation running under target and with fiscal issues up ahead in the New Year, the Fed will be cautious about announcing a taper before 2014, but the strength of this data may lead them at the next FOMC meeting to heavily signpost their intention to reduce stimulus in the immediate future.

Next week will be a lot quieter in terms of economic releases, with US retails sales data on Thursday being a highlight.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.