US stocks continued their gains for a third straight day and the S&P 500 came up two points shy of a record close, as Federal Reserve minutes released today indicated the central bank will continue to support the economy amidst uneven gains in the labor market.
By Paolo Palazzi-Xirinachs
Wednesday, August 20, 2014
The S&P 500 added 0.3% to 1,986.50 at market close in New York (EST). The gauge touched 1,988.57, briefly surpassing its previous closing high of 1,987.98, before pulling back. The Dow Jones also rose 60.11 points, or 0.4% to 16,979.70.
Fed officials raised the possibility that an end to aggressive stimulus might occur sooner than anticipated while acknowledging continued slack in the labor market. The Fed is on pace to wind down its monthly bond purchases in October, and intends to keep the benchmark interest rate low for a “considerable time” after that. The minutes said that “many participants” noted that if jobs data moved toward the committee’s objectives more quickly than expected, “it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated.” Low inflation has given the Fed room to hold rates near zero even as economic growth shows signs of accelerating. Data yesterday showed inflation remains below the Fed’s target, while a report on Aug. 1 indicated employers added more than 200,000 jobs for a sixth straight month in July, the longest such period since 1997.
Yellen will speak on labor markets at the annual Fed Bank of Kansas City’s economic symposium that begins tomorrow in Jackson Hole, Wyoming. European Central Bank President Mario Draghi will also speak. Three rounds of Fed stimulus and better-than-estimated corporate earnings have sent the S&P 500 higher by as much as 194% from its bear-market low in March 2009. The index has rebounded 4% since a three-month low on Aug. 7. The gauge tumbled as much as 3.9% from its all-time high on July 24 amidst growing concern over global conflicts from Ukraine to Gaza and Iraq.
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