Stocks creep higher on Wall Street

After three days of losses, US share prices are finally seeing a rebound, but caution is still in the air ahead of next week’s FOMC meeting.

Two weeks into December and there’s still no sign of a Santa rally. Instead the stock market has been on the back foot most of the week, under a cloud of taper worries.

Buying into dips has been a common behaviour for investors in 2013, but it’s only today that we’re starting to see the first signs of that this week, as slightly cheaper prices have attracted some bargain hunters. By early afternoon in New York, the Dow Jones was up 0.24% or 37 points, while the S&P 500 index was up just 0.15% at 1778.1.

The magnitude of these rises aren’t significant enough to suggest that any of the wariness regarding next week’s FOMC meeting has waned, and the dollar’s performance today suggests that market expectations regarding a December taper could still be strengthening. The euro lost 0.25% against the dollar, while cable slipped 0.40%.

A report released earlier form the Bureau of Labor Statistics showed the Producer Price Index declined by 0.1% in November, in line with expectations. Following the 0.2% drop seen in October, the report suggests inflation remains very cool, with core prices climbing just 0.1%. The core rate is up 1.3% from a year ago, while the overall level has increased just 0.7% year-on-year.

At the producer level, there is pretty much no inflation, which agrees with yesterday’s soft import and export prices report. Inflation will be the key data point for the doves to use in their arguments at the FOMC meeting next week, while the hawks will point to advances in employment and rising retails sales.

While positive data of late has certainly increased the chances of a December taper, such an outcome would still be a surprise decision.

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.