Stocks on Wall Street rose on Monday, consolidating the impressive gains made last week when the S&P 500 index advanced its most in nine months.
By Peter Martin
Monday, April 21, 2014
The earnings seasons is in full swing this week and we will be seeing quarterly reports from a host of household names in the next few days, including Amazon, Boeing, Coca-Cola, Facebook, McDonald’s and Microsoft. Online television and film provider Netflix, one of the momentum stocks that have been knocked down recently, reports after the close on Monday evening. By late morning in New York on Monday, the Dow Jones Industrial Average was up 0.12% or 20 points at 16,428, while the broader-based S&P 500 index climbed just 0.04% to 1865.6.
Economic news this morning has been fairly upbeat, with the Chicago Fed’s National Activity Index (CFNAI) coming in at a level of 0.20 in March, in line with estimates, while the February reading was revised higher, amended up to 0.53 from an originally-reported level of 0.14. This index is compiled so that growth in line with the historical trend yields a level of 0, so any positive reading suggests growth that is above trend. The Conference Board’s index of leading indicators, meanwhile, increased 0.8% in March, pipping the consensus estimate for 0.7% and accelerating from the 0.5% seen for February. The index of leading indicators is a composite index that takes a selection of ten indicators that have historically shown superior accuracy in predicting economic trends, attempting to make one single guide of the long-term trend of the economy. As the components have already been released to the market before the Conference Board publishes the index, it lacks timeliness, but has shown historically to be a useful predictor of changes in the business cycle.
The improvements signalled by macro-economic reports now streaming in for the beginning of spring looks to have re-assured investors that weakness seen at the beginning of the year can, at least partly, be attributed to the unusually poor weather in that period. As a consequence, interest in safe-haven precious metals appears to have waned, with the price of gold slipping 0.57% to $1286.5 per troy ounce, hitting a two-week low earlier in Monday’s trading session, while silver fell more than 1% to $19.40 per troy ounce. Investor demand for gold has also been hampered by the consistent reductions made by the Fed in the pace of its monthly bond purchases. Gold’s rapid advance in price from late 2008 through to mid-2011 was fuelled by the Fed’s aggressive stimulus measures during that period.
In the forex market, the Japanese yen has weakened against most of its peers, following news that Japan’s trade deficit widened significantly last month. The deficit increased to 1.45 trillion yen in March from 802.5 billion yen in the month prior, with export growth easing and a weaker yen pushing up import costs. Not only was March’s deficit wider than forecast, with the consensus estimate from a Reuters survey being for 107 trillion yen, but it was more than four times the size of the deficit in the same month in 2013. That helped push USD/JPY up 0.12% by late-morning in New York to 102.55. The Bank of Japan meets at the end of the month to decide on monetary policy.
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