Sun, Nov 09, 2014 - Page 15 News List

Economic data, post-election hopes buoy Wall Street


Wall Street enjoyed another upbeat week amid a slew of domestic economic reports and midterm elections that put Republicans in control of the US Senate and raised their clout elsewhere.

Although the Dow Jones Industrial Average and the S&P 500 finished the week on all-time highs, the gains were not as robust as those seen in the previous two weeks. Friday marked the third straight record close for the two indices, with the Dow rising 183.41 points (1.05 percent) to end the week on 17,573.93, while the S&P 500 gained 13.87 (0.69 percent) to 2,031.92.

The tech-rich NASDAQ Composite Index inched up by 1.79 (0.04 percent) to 4,632.53.

“Sentiment remains very bullish,” Kenjol Capital Management portfolio manager David Levy said.

The S&P 500 has risen more than 9 percent since Oct. 16, when talk of a market correction dominated the finance world.

“Time and again you’ve seen sell-offs purchased and markets bounce back to high levels in short order,” Levy said. “We’ve seen a continuation of that and, as a result, sentiment remains very positive.”

Analysts said the balance of the week’s economic and earnings reports was consistent with a slow-growth economy, culminating with Friday’s employment report, which said the US economy added 214,000 jobs last month, weaker than the 235,000 projected by analysts.

Analysts said the report marked another month of job growth above 200,000, but was not strong enough to prod the US Federal Reserve to shift from its plan to keep interest rates low well into next year.

In economic reports released earlier in the week, purchasing managers indicated stronger manufacturing industry activity last month and slightly weaker growth in services compared with September. The US trade deficit widened to US$43.0 billion in September, as exports slowed and imports remained flat from the previous month.

Levy said some of the data has been “mildly disappointing,” but not bad enough to shake confidence in the recovery of the world’s No. 1 economy, especially compared with weakness overseas.

“The slow recovery is still intact,” he said.

The string of records also followed Tuesday’s elections, in which Republicans seized control of the Senate, added to their majority in the US House of Representatives and won key Democrat-held governorships.

Analysts said the election had raised hopes of progress on a host of pro-business initiatives such as tax reform, the Keystone XL pipeline and immigration reform.

The market’s performance was consistent with past elections and “suggests that investors believe that a change in Washington is likely to help the economy compared to the partisan gridlock of the past few years,” said a note by Gary Thayer, chief macro strategist at Wells Fargo Advisors LLC.

Still, Thayer warned that US President Barack Obama and his Democratic Party will not want to alienate their base heading into the 2016 presidential elections, a factor that could prevent major new policies from advancing.

“The president has an opportunity to be more than a lame duck for the next two years, but he may still want to stand his ground on issues important to the Democratic Party,” he said.

In corporate news, petroleum stocks continued to underperform the broader market as oil prices drifted lower. Dow member Chevron Corp fell 1.0 percent on the week and Marathon Oil Corp dropped 2.9 percent. Some petroleum stocks, such as Apache Corp, have fallen nearly 20 percent since late September.

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