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While you were sleeping: Bullard lifts Wall Street

Friday 17th October 2014

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Wall Street gained, rebounding from earlier declines, after St. Louis Federal Reserve Bank President James Bullard said the US central bank should consider delaying the end of its bond-buying program given a decline in inflation expectations.

“Inflation expectations are declining in the US,” Bullard told Bloomberg News in Washington. “That’s an important consideration for a central bank. And for that reason I think that a logical policy response at this juncture may be to delay the end of the QE.”

In afternoon trading in New York, the Standard & Poor’s 500 Index rose 0.71 percent, while the Nasdaq Composite Index climbed 0.72 percent. The Dow Jones Industrial Average slipped 0.02 percent. Markets remained in flux with the benchmarks fluctuating repeatedly between gains and losses.

In afternoon trading on the Dow, a drop in shares of Wal-Mart and those of Merck, last down 2 percent and 1.3 percent respectively, outweighed gains in shares of UnitedHealth and those of Home Depot, up 5.2 percent and 2.1 percent respectively.

In Europe, the Stoxx 600 finished the day with a 0.4 percent fall from the previous close. Earlier in the session it had dropped as much as 2.9 percent, according to Bloomberg, but recovered after Bullard’s comments.

The UK’s FTSE 100 Index fell 0.3 percent, while France’s CAC 40 declined 0.5 percent. Germany’s DAX rose 0.1 percent.

There was good news on the US jobs front. A Labor Department report showed initial claims for state unemployment benefits fell 23,000 to 264,000, the lowest level since 2000.

Separately, a Fed report showed total output at US factories, mines and utilities rose 1.0 percent last month, the largest increase since November 2012 and surpassing economists’ expectations. Manufacturing output rose 0.5 percent, following a 0.5 percent slide in August.

“The data is still consistent with good, solid growth in the US,” Michael Feroli, chief US economist at JPMorgan Chase in New York, told Bloomberg. “We’re not seeing much evidence that global developments are affecting us.”

The Chicago Board Options Exchange Volatility Index, considered investors’ fear gauge, fell 4.5 percent from the highest level in more than a year to 25.08.

Shares of Chesapeake jumped, last up 16.3 percent, after the company said it agreed to sell assets in the Southern Marcellus Shale and a portion of the Eastern Utica Shale in West Virginia to Southwestern Energy for US$5.4 billion 

Meanwhile shares of Netflix plunged, last down 19.2 percent, after the company reported a pace in subscriber growth for the third quarter that fell short of expectations, leading even the most bullish of analysts to rein in their price targets.

Shares of eBay also dropped, last down 5 percent, after the company’s fourth-quarter sales forecast missed the mark.


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