On Friday (October 31, 2014), the U.S stock markets rose to new records. The Dow Jones Industrial Average (DJIA) rose by 1.13%, to 17,390.52; the S&P 500 (SPX) increased by 1.17%, to 2,018.05; the Nasdaq Composite (COMP) rose by 1.41%, to 4,630.74.
On weekly basis, the stocks saw the new record levels. DJIA increased by 585 points or 3.5%; S&P 500 increased by 53 points or 2.7%; Nasdaq Composite rose by 147 points or 3.3%.
On the year-to-date basis, DJIA increased by 4.9%, S&P 500 rose by 9.2%, and Nasdaq Composite increased by 10.9%.
Last week, U.S. investors focused on the following developments;
- The Bank of Japan unexpectedly announced additional stimulus program, expanding asset purchases with the aim of boosting inflation, weakening the yen and stimulating the Japanese economy. The Bank of Japan board voted 5-4 in favor of increasing the central bank’s annual asset purchases to 80 trillion yen, from a prior target range of 60 trillion yen to 70 trillion yen.
- US economy annualized growth rate announced as 3.5% for the third quarter, thanks to rising consumer, government, and business spending. It was better than expectations.
- US Fed ended its bond-buying program as expected. Fed members expressed confidence in the progress made by the US labor market but maintained that interest rates would remain near zero for a “considerable time.
- Consumer confidence index rose to 94.5 in October from 89.0 in September. Its highest level since late 2007. The consensus was 86.8.
- US weekly initial jobless claims rose by 3.000 to 287.000, which is higher than the estimate of 280.000. The four-week moving average fell to 281.000, the lowest level since May 2000.
- Durable goods orders fell 1.3% in September. The consensus was 0.8% increase. Transportation dipped 3.7 percent after falling a monthly 42.4 percent in August. Excluding transportation, durables orders slipped 0.2 percent, following a rebound of 0.7 percent in August. Expectations were for a 0.5 percent gain.
- US personal spending decreased by 0.2% in September, and the price index for personal consumption expenditures rose 1.4% from a year earlier. In addition, personal income advanced 0.2 percent in September, following a 0.3 percent gain in August. Analysts projected a 0.3 percent gain for September.
- Pending home sales index rose 0.3% in September, after a 1.0% decline in August. The concensus was 0.8% increase.
- Bank of Russia increased its benchmark rate to 9.5% from 8.0 % surprisingly to ease inflation pressures and stop ongoing capital outflows. Note that Russia’s economy is being in troubles due to economic sanctions, sluggish growth and sharply lower oil prices.
- The World Bank urged China to let go of rigid growth targets and to focus more on reforms, stating that China’s economy could grow 7.0% in 2015 without hurting its labor market.
- ECB announced that more than 90% of European banks passed stress test.