Sun, Sep 07, 2014 - Page 15 News List

US stocks continue strong push

EASY MONEY:Weak jobs growth failed to slow investors, as some thought it could compel US policymakers to maintain a cautious approach to monetary tightening

AFP, NEW YORK

US stocks continued their upward push this week amid signs of progress in the US economy and confidence that global easy-money policies would persist.

For the second time in a row, the broad-based S&P 500 closed the week at record levels, adding 4.34 points (0.22 percent) this week to 2,007.71.

The Dow Jones Industrial Average tacked on 38.91 (0.23 percent) to 17,137.36, just shy of a record, while the tech-rich NASDAQ Composite Index edged up 2.63 (0.06 percent) to 4,582.90.

Analysts welcomed another week of gains following a torrid August that lifted both the Dow and S&P 500 by 4 percent.

“It says the uptrend is still intact,” said Michael James, managing director of equity trading at Wedbush Securities. “The market remains extremely resilient.”

On Friday, stocks initially fell after the US Department of Labor said the economy added only 142,000 net new jobs last month, well below the 223,000 markets were expecting.

However, the market quickly shrugged off its doubts, finishing the trading session with solid gains that left US stocks in the black for the week. Investors seemed to take the weak jobs growth with a grain of salt in light of other strong data. Reports from the Institute for Supply Management showed that activity in the manufacturing sector last month reached its best level since August 2011, while activity in the services sector rose to its highest level since January 2008.

“It’s slow and steady with the economic recovery,” said David Levy, a portfolio manager at Kenjol Capital Management.

Analysts also viewed Friday’s jobs report as likely to discourage the US Federal Reserve from raising benchmark interest rates quickly.

“A disappointing employment report for August gives US policymakers more food for thought about when the economy might be capable of withstanding higher interest rates,” economist Chris Williamson at Markit said.

“The slowdown in hiring certainly vindicates the Fed’s cautious approach to tightening policy,” he said.

The European Central Bank’s (ECB) moves on Thursday also bolstered confidence that liquidity would remain high on a global level.

Amid worries that the eurozone single currency area is threatened by stagnant growth and deflation, the ECB cut its main refinancing rate to 0.05 percent from 0.15 percent.

The ECB also lowered its deposit rate and marginal lending rate, and said it would undertake purchases of securities on a large scale to inject cash into the economy.

“If global rates continue to remain low, that should provide the impetus for higher stock prices,” Levy said.

Investors continued to monitor developments in Ukraine, where government forces and pro-Kremlin rebels signed a truce on Friday even as US President Barack Obama and others expressed skepticism over the agreement.

Major corporate stories for the week included the latest twists in a takeover battle for discount retailer Family Dollar, which on Friday rejected a sweetened offer from Dollar General, while again endorsing a deal with Dollar Tree.

However, Dollar General hinted at a possible hostile campaign, saying that it “remains committed to acquiring Family Dollar and is currently evaluating its next steps.”

Oil giant BP took a big hit, when US Federal Judge Carl Barbier concluded the massive 2010 Gulf of Mexico oil spill was the result of the company’s “gross negligence.” The decision could expose BP to as much as US$18 billion in additional federal penalties.

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