Dow sets new intraday record, euro rallies

The Dow has surged again today, with buyers apparently unfazed by record share prices, while the euro has bounced ahead of tomorrow’s ECB meeting.

We saw data earlier showing German industrial orders climbed more than expected in September, and that has set the tone for the ensuing trading day, with a risk-on sentiment permeating both the European and US stock markets.

That has helped pushed the Dow to a new record high of 15,732.88, and by early afternoon in New York, the index was still close to that high, trading up 0.69% or 108 points at 15,726. The S&P 500 also gained, adding 0.36% to stand at 1769.3.

It hasn’t been plain sailing across the board, though, with technology stocks struggling a little. Tesla Motors plunged 13.8% after missing earnings estimates when it reported last night, and that has contributed to the NASDAQ 100’s 0.15% decline today.

The US Conference Board released its index of leading indicators for September today, delayed from its originally scheduled release because of the government shutdown. The report signalled strong upward momentum for the US economy just ahead of the shutdown, with financial components showing notable vigour and suggests that the current buoyancy of the stock market is not without justification.

Further validation of current valuations is provided by an earnings season that has been robust so far. We are at an advanced stage in reporting for this quarter, having seen earnings from around 85% of the S&P 500 companies; of those, well over two thirds have beaten estimates.

The strength of the German factory orders, which rose 3.3% against expectations of just 0.5%, reins in expectations of a rate cut from the ECB tomorrow. That has helped EUR/USD climb 0.35% to 1.3520.

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