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Home » Online Forex Trading Blog » US Economy Gets Lift

US Economy Gets Lift

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After digesting Friday’s dismal December non-farm payroll report, investors came out swinging on Monday. Profit taking sent all three major indices lower. But, Tuesday was a new day and with some stronger-than-expected consumer spending data, markets immediately turned north.

The strong December consumer spending report softened the blow of the December payroll report, which many analysts expect to be revised significantly upward in February. JPMorgan and Wells Fargo both posted solid quarterly results as Wells Fargo approached all-time highs and JPMorgan rose 0.07 percent to 57.75, the highest level since 2000. 

The US Commerce Department released figures showing that retail sales, excluding autos, gasoline, building materials and food service, the core sales, increase by 0.7 percent, far outdistancing predictions of 0.3 percent.

The Dow Jones climbed 83.74 points by mid-afternoon to 16,3421.68 while the S&P 500 took dead aim at 1900, gaining 15.689 to 1,835.79. The red-hot Nasdaq Composite added 58.038 points (1.44 percent) to 4,172.342. Palo Alto-based electric car manufacturer Tesla, TSLA, gained 12 percent on the day.

On the international front, the pan-European FTSEEurofirst 300 index of regional equities was up 0.15 percent to 1,326.37. The MSCI, 45-country index was up 0.13 percent after taking early day losses.

Forex Movement

The dollar index reversed losses yesterday gaining 0.17 percent to 80.652. The euro survived analysis of mixed messages from ECB president Mario Draghi and held firm at $1,3673. German bund futures rose 3 ticks to 140.68 euros. Spain reported the fastest economic quarterly growth rate since 2008 sending Spanish bonds dipped to 3.83 percent.

Against the beleaguered yen, the dollar rebounded after two days of losses, climbing back to 104.12 yen, up 1.11 percent. Of great interest will be actions taken by the Federal Reserve. With the strong retail sales report, the inclination might be to upgrade the tapering program. Another 10 billion per month reduction from the current 75 billion looks probable. Equity markets have typically resisted this pressure but with the strong banking reports, resistance could be waning.

Abenomics may soon have to undergo a bit of tapering. The large volume easing is taking a toll on Japan’s GDP. Moderation, which would mean strengthening the yen, could now be in the near future.

Euro zone industrial production pushed the euro ahead about 0.1 percent. But last week’s comments by Mario Draghi seemed to cause more confusion than anything else. All things considered, the euro looks to be heading lower.

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About the Author -

Hiland is a professional writer with extensive entrepreneurial experience. He is a graduate of St. George’s School Newport, RI and the State University of New York at Albany where he majored in history. He has been active in the real estate business for 30 years and has founded and sold several businesses. Hiland currently writes for several financial sites and is a published author of the novel The Last Parade. He has recently completed a manuscript for a children’s book entitled Sami and The Minnow Man.

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