Dow on course for second record close in a row

Deep into today's trading session, US shares were still up, meaning both the S&P and the Dow could be heading for their highest closes ever.

One thing we’ve seen time and time again this year is that investors really, really like the Fed’s monetary stimulus. Janet Yellen’s remarks in support of stimulus have naturally provided a lift to the stock market today.

Into the last hour of trading on Wall Street, the Dow was up 0.26% at 15,862 and the S&P 500 had climbed 0.45% to 1790.0. Those levels are just a stone’s throw from intraday highs, and should the index benchmarks hold their gains, it would mean new closing record highs being set.

Given the duration of the stock market’s ascent, we’ve been on the lookout for a correction for quite a while now, but the prospect of extended stimulus provides a benign outlook for equity prices.

Even putting Ms Yellen’s comments to one side, it would be hard to make a case for tapering at the Fed’s last remaining FOMC meeting this year. Several members of the committee have said they want to see continued improvement in unemployment before initiating a taper and with October’s unemployment rate having worsened, I would argue we would need to see progress in both November and December for any chance of a taper come the December FOMC meeting. Bearing in mind today’s jobless claims report showed next to no improvement, that seems a tough ask.

Tomorrow we will have data from the manufacturing sector, with the Empire State manufacturing survey for November and industrial production for October.

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