Record Breaking Rally Continues

Record Breaking Rally Continues

Upbeat domestic data, along with assurances from the ECB President that the central bank stands ready to act if needed, have added impetus to US stock indices today as their remarkable rebound from October’s lows continues.



Record Breaking Rally Continues
Record Breaking Rally Continues

Upbeat domestic data, along with assurances from the ECB President that the central bank stands ready to act if needed, have added impetus to US stock indices today as their remarkable rebound from October’s lows continues.

Initial jobless claims fell 10,000 to 278,000 last week, which lowers the four-week moving average for the seventh time in eight weeks. The four-week average improved from 281,250 to 279,000 and now stands at a new 14-year low. Continuing claims also improved, dropping by 39,000 to 2.348 million, another 14-year low.

As well as these encouraging signs from the labor market, a separate report revealed that non-farm productivity grew at a faster-than-expected pace in the third quarter. Productivity was up an annualized 2.0% in the third quarter, a slower rate of increase than the 2.9% seen in the second quarter (upwardly-revised in today’s report from the 2.3% originally reported), but substantially higher than the consensus estimate of 1.5%. Unit labor costs grew an annualized 0.3% in the third quarter.

By early afternoon in New York, the Dow Jones was up 0.28% or 49 points at 17,533, the S&P 500 index had risen 0.21% to 2028.1, though the NASDAQ 100 index was little-changed at 4152.7. This meant both the Dow Jones and the S&P 500 index set new intraday records, with the former reaching 17,550.32 and the latter touching 2028.91.

Euro dips after ECB vows readiness to expand stimulus
The ECB announced no changes in interest rates as the outcome of its latest policy meeting today. With rates already at record lows (and with deposit and margin lending facilities in negative territory), the central bank is left with little wiggle room in terms of conventional monetary policy, and consequently the focus is on what the ECB intends to do with stimulus.

ECB President Mario Draghi, in his customary post-meeting press conference, acknowledged that the risks to the Eurozone economy remain to the downside and revealed that the central bank’s governing council are undivided when it comes to fighting low inflation. ‘Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate,’ he said. The euro fell 0.79% against the dollar to 1.2388, reaching its lowest level in more than two years.

Non-farm payrolls
US economic data has generally been strong lately, prompting the Fed to bring an end to it stimulus program. This now raises the question of when the Fed will begin to tighten policy. One of the key measures that might help answer that question is the non-farm payrolls report, which is closely-followed by the Fed. October’s data is released tomorrow morning, as part of official government gauges of the employment situation. Non-farm payrolls are expected to have increased by 240,000 last month (versus 248,000 in September) and the unemployment rate is expected to remain at a six-year low of 5.9%.


This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.