Sun, Dec 08, 2013 - Page 15 News List

Wall Street snaps 8 weeks of gains despite good data

NOT GOOD ENOUGH:A report showing joblessness hit a five-year low last month as 203,000 jobs were added spurred a rally, but could not sustain the winning streak

AFP, NEW YORK

A robust run of US economic data this week was not enough to prevent the Dow and the S&P 500 from snapping an eight-week winning streak.

Yet the stock markets’ sharp rally on Friday after a much stronger-than-expected jobs report suggested that investors may be growing comfortable with the idea of the US Federal Reserve cutting back its huge stimulus measures as the economy improves.

Over the week, the Dow Jones Industrial Average fell 0.41 percent to 16,020.20 points, while the S&P 500 index, a broad measure of the markets, slipped a bare 0.04 percent to 1,805.09 points and the tech-rich NASDAQ Composite edged up 0.06 percent to 4,062.52 points.

The US Department of Labor’s highly anticipated jobs report for last month came ahead of the Fed’s Federal Open Market Committee (FOMC) policy meeting on Dec. 17 and Dec. 18. The report showed that the unemployment rate dropped to a five-year low of 7 percent, from 7.3 percent in October, while the US economy added 203,000 jobs.

“The final employment report of the year was generally stronger than expected, raising speculation that the FOMC might begin to reduce the pace of asset purchases in December,” Nomura Holdings Inc analysts said in a research note.

Some analysts said the Fed would likely wait for additional positive data before it starts tapering its US$85-billion-a-month in bond purchases aimed at boosting growth.

“While there was some talk that the encouraging job growth raised the odds of the Fed announcing a tapering at its December meeting, the message of the markets today was either that it didn’t believe there would be a tapering this month or that it doesn’t fear a tapering this month,” Briefing.com said in a note.

On Thursday, stocks fell after an unexpectedly sharp upward revision to third-quarter economic growth to an annual rate of 3.6 percent from an initial estimate of 2.8 percent also raised expectations of a Fed taper.

Other economic reports in the data-packed week were mostly positive, including a stronger-than-expected Institute of Supply Management reading on manufacturing activity and a spike in new-home sales in October that marked the biggest monthly increase in 33 years.

The Fed’s Beige Book report on current economic conditions showed that the US economy is continuing to grow steadily, with gains in all regions and most industries.

Auto sales last month hit the fastest pace since 2007, raising expectations for a strong retail sales number on Thursday, the only major data due next week.

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