Dow makes triple digit advance

After an uninspiring start to the New Year, Wall Street has sprung into life today, with a surging stock rally ahead of key events this week.

By early afternoon in New York, the Dow Jones had rallied 118 points (0.72%) to 16,543 and the S&P 500 gained 0.65% to 1838.6. The NASDAQ 100 performed even better, advancing 0.84% to 3556.3.

The rally follows news that the US trade deficit reduced significantly in November, narrowing down to $34.3 billion, the smallest US trade deficit in five years, from October’s trade gap of $39.3 billion, which was revised to a smaller deficit than the $40.6 billion that was reported last month.

The dollar was also boosted by this report and the dollar index, a measure of the dollar’s strength against a basket of six major currencies, climbed 0.2%. The improving trade balance is just the latest in a series of robust US indicators, the strength of which suggest the economy is healthy enough to bear up once the Fed eventually removes its monetary stimulus.

Despite today’s gains in the stock market, the S&P 500 still remains in the red for January so far. The tone of trading is likely to be heavily influenced by news flows in the next few days, though, with minutes from the last Fed meeting scheduled for release tomorrow, the US earnings season beginning on Thursday and government employment data for December out on Friday.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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