US stocks bounce despite unclear economic data

Economic data released today paints a muddled picture, but hopes of extended stimulus from the Fed have helped shares advance on Wall Street today.

The US stock market rally has resumed after a brief pause in the upward march yesterday, with the Dow rising 0.57% or 88 points by early afternoon in New York to 15,501 and the S&P 500 moving up 0.28% to stand above 1750 once again.

The advances follow the release of economic data that couldn’t really be described as encouraging.

Although jobless claims dropped last week by 12,000 to 350,000, the decline was less than the consensus estimate of a Reuters poll, which had called for the number of first-time claimants to fall to 340,000.

The lingering effects of a backlog of claims from California may be clouding the data, as well as fallout from the government shutdown. The four-week average increased to 348,250.

The US trade deficit widened marginally from $38.6 billion to $38.8 billion in August, with overseas demand on the soft side, which caused exports to slip slightly, while imports remain unchanged.

The preliminary reading of the PMI manufacturing index from Markit showed a decline in October, dropping to a level of 51.1 from 52.8 in September. Some regional manufacturing surveys have shown little ill effects from the government shutdown, but this latest report suggests it has caused some drag.

If US growth has been hindered by the shutdown, as seems likely, it is likely to extend the timeframe that the Fed is looking at for starting to reign in its monetary stimulus., which is causing some headwind for the US dollar. EUR/USD rose 0.2% by early afternoon in New York, after earlier having touched its highest level since November 2011.

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