A day removed from the Fed meeting, US stock indices continued their push as the Dow and S&P 500 posted record closes.
Thursday, September 18, 2014
The Dow gained 0.64% to finish at 17,266.06 and the S&P 500 added 0.49% to reach 2,011.37. The Nasdaq also advanced, rising 0.69% to 4,593.43 by Thursday’s close.
Investors were optimistic before Alibaba’s debut, expected to come Friday morning. Adding to the excitement was low unemployment data which outweighed poor housing numbers and Chinese stimulus efforts.
Fed and jobless claims provide optimism
In the first full day of trading since the Federal Open Market Committee’s two-day meeting this week, investors expressed their support for the continued low interest rates, to which some attribute the stock market gains of the last five years, according to the Wall Street Journal.
"If the pace of inflation remains contained, it is likely that the Fed will increase rates in a slow and methodical manner, which in our view presents a favorable backdrop for equities," Terry Sandven, chief equity strategist at US Bank Wealth Management, told the Wall Street Journal. A strengthening economy will likely result in more market growth for 2014, he continued.
Weekly unemployment claims dropped by 36,000 to 280,000 from September 7 – 13, the largest weekly decline in almost two year. Economists polled by the Wall Street Journal had forecast an 11,000-jobless claim drop.
Alibaba set to make debut
According to Bloomberg, Alibaba has drawn attention from major investment firms such as Fidelity, BlackRock and T. Rowe Price. China’s Internet giant will settle on its IPO later on Thursday and will likely open on the New York Stock Exchange Friday morning. Analysts expect shares to sell for $66 to $68.
Alibaba believes its market valuation to be as much as $167.6 billion, 28 times greater than its expected earnings through March 2015. Experts anticipate the company’s net income to appreciate by over 50% this fiscal year.
Some large investors are concerned over Alibaba’s structure that places shareholding control in the hands of a few insiders. The company requires investors to buy contracts rather than the stocks themselves, which can be changed without the investor’s agreement.
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