Sun, Jul 29, 2012 - Page 15 News List

Dow surges past 13,000 points

STIMULUS:Pledges by the ECB president, as well as the German and French leaders, to support the euro bolstered expectations that more easing measures are coming

AFP, NEW YORK

Investors face US and European central bank meetings next week hoping to see fresh action to spur economies damaged by the eurozone sovereign debt crisis.

Over the week, the Dow Jones Industrial Average gained 1.97 percent, finishing above 13,000 points for the first time since early May. The blue-chip index of 30 stocks finished on Friday at 13,075.66, the highest close since May 4, and the second day of triple-digit gains.

The technology-rich NASDAQ advanced 1.12 percent to 2,958.09 points. The Standard & Poor’s 500, a broad measure of the markets leaped 1.71 percent to 1,385.97 points.

“Stocks rallied throughout the day on speculation that the [US] Federal Reserve and the European Central Bank [ECB] are close to providing further stimulus,” analysts at Wells Fargo Advisors said.

All eyes will be on the Fed when it wraps up a two-day policy meeting on Wednesday.

Economists are divided over whether the central bank’s Federal Open Market Committee will announce additional stimulus for the slowing economy, or wait for more information.

The world’s largest economy slowed in the second quarter as consumers cut back spending on big-ticket items, official data showed on Friday.

The US Commerce Department’s announcement that GDP fell to a 1.5 percent annual rate from 2 percent in the first quarter fueled a big rally on Wall Street, which had expected a worse reading.

Economists say the economy is set to muddle along in the third quarter amid risks from Europe and fears that the government’s year-end tax hikes and spending cuts could push the country back into recession.

“The outlook is worse than the Federal Reserve’s June projections, and as a result we expect to see another round of quantitative easing from the Fed,” said Nigel Gault, chief US economist at IHS Global Insight. “But we expect the Fed to wait until September to act — which would allow it to see two more monthly employment reports — rather than move at next week’s meeting.”

The big week for macroeconomic news culminates on Friday with the keenly awaited US jobs report for this month. Expectations are for the unemployment rate to hold unchanged at 8.2 percent and sluggish jobs growth to continue.

With markets on tenterhooks over the eurozone’s fate as debt-laden Greece looks headed for an exit and yields on sovereign debt of Italy and Spain surge higher, investors will be looking across the pond to the European Central Bank’s meeting on Thursday.

ECB President Mario Draghi’s comments that the bank was “ready to do whatever it takes” to preserve the euro on Thursday sparked massive equities rallies.

Pledges by the leaders of Germany and France on Friday to do “everything” to save the shared currency further eased concerns.

In a joint statement, German Chancellor Angela Merkel and French President Francois Hollande pledged to do “everything to protect the eurozone.”

Wall Street put on an impressive comeback late in the week, after stocks plunged Monday on eurozone crisis fears and the Dow closed Tuesday with triple-digit losses for the third straight day.

Better-than-expected earnings reports from Merck, ExxonMobil and Boeing, among others, spurred bullish sentiment.

Consumers will be in focus on next week’s economic calendar, starting on Tuesday with personal income and spending numbers and a July reading on consumer confidence.

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