Despite today’s economic data proving to be a little disappointing, the big picture of late for the US economy has been one of solid improvement.
Against such a backdrop, the Fed’s decision to taper such a small amount seems sensible and the stock market has proven to be amenable, which can be seen as a triumph for the Fed’s ability to successfully massage expectations.
Low inflation may yet prove to be a problem, but as St Louis Fed President James Bullard pointed out earlier this month, the Fed could simply defer any further tapers in order to counter this problem if no improvement materialises in subsequent months.
Oracle surged more than 6% today after the software and database company reported strong second-quarter sales late yesterday evening. Revenue rose 2%, beating analyst estimates, with a strong performance from the company’s cloud enterprise offering providing a boost. With so much of this year’s rally having been fuelled by the Fed’s stimulus, Oracle’s sharp rise today is a timely bringing of the fundamentals of company earnings and revenue back into focus.
Although the stimulus is story is not over yet, and quantitative easing is likely to remain with us through much of next year, yesterday’s taper announcement did signal the beginning of the end for QE3. Early in the New Year the US corporate earnings season will kick off once again in full force.
Facebook fell more than 1% following the announcement that founder and CEO Mark Zuckerberg is set to sell more than $2 billion worth of shares as part of an offering of 70 million shares.