The Dow poked its head above the psychologically-important 15,000 level today, and looks on course to achieve three days in a row of gains, something that we didn’t see even once during May. The S&P 500 and the NASDAQ 100 also made big advances, both rising well over half a percent.
First-time jobless claims dropping 9,000 to 346,000 last week , consumer spending rising 0.3% in May and pending home sales jumping 6% last month all show that the economy is moving in the right direction after a soft start to the quarter, and these positive signs have contributed to the stock market’s buoyancy today, but it is remarks from William Dudley, President of the New York Fed, that has provided the biggest shot in the arm to stock prices.
He said in a speech today that tapering of the Fed’s stimulus was not set according to the calendar, but by economic performance and that if growth was to drift below the Fed’s forecasts that the stimulus would continue for longer.
His comments were not the only ones along these lines from the Fed today. Atlanta Fed President Dennis Lockhart backed up this view by saying ‘There is no "predetermined" pace of reductions in the asset purchases, nor is the stopping point fixed. The pace of purchases, the composition of purchases and the ultimate size of the Fed's balance sheet still depend on how economic conditions evolve.’
We will hear from more members of the Fed tomorrow. Jeffrey Lacker, President of the Richmond Fed, is speaking in West Virginia on the economic outlook, and John Williams, President of the San Francisco Fed, is speaking in California.