Dow gains triple-digits as consumer spirits rise

Stocks have thrived on Wall Street today, with the S&P 500 setting a new record amidst a flurry of economic reports.

We had some major economic reports earlier today, including a second-estimate on US GDP for the last quarter of 2013 and February’s final read on the University of Michigan’s index of consumer sentiment. As I suggested yesterday, the impact of an upbeat outcome for the latter has held a far greater sway on the stock market than the less-timely former.

Consumer sentiment rose to a final reading of 81.6 for February, up from the 81.2 level seen both mid-month and at the end of January. This is a bullish sign, showing that the attitude of consumers has not been brought down by the harsh winter weather. With the expectations component of the index driving the headline gains, consumers are optimistic about the near future and giving cause to hope for a bounce in consumer spending, the lifeblood of the US economy,  when more favourable temperatures arrive.

Fourth-quarter GDP was revised down from an originally-reported 3.2% to 2.4%, quite a slowdown from the 4.1% seen in the third quarter. The impact of this result was limited, however, as it was not far from the consensus estimate of 2.5%. So although growth was not as punchy in the fourth quarter as initially estimated, this outcome was already well-anticipated.

By early afternoon in New York, stock prices were flourishing: the Dow and S&P 500 both boasted gains of 0.72%, with the S&P setting a new intraday record earlier of 1867.89.

IGA, may distribute information/research produced by its respective foreign affiliates 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.