Visa and Merck contribute to most of Dow's gains
US stocks ended substantially higher on Monday, 30 October 2014. The Dow industrials staged a rally of more than 200 points, after starting the session modestly higher. The rally marked the blue-chip indexes eighth straight triple-digit gain in an October that was frightful, at times. Broader benchmarks also recorded modest gains, a day after the Federal Reserve officially announced the conclusion of its bond-purchasing initiative.
The Dow Jones Industrial Average rallied 221.11 points, or 1.3%, to 17,195.42. The Nasdaq Composite added 16.91 points, or 0.4%, to 4,566.14. The S&P 500 index closed 12.35 points, or 0.6%, to 1,994.65, after flirting with the 2,000 level at session highs.
The top two winners on the index, Visa Inc and Merck & Co, contributed 141 and 71 points, respectively, while more than two-thirds of its components finished higher.
But rosy economic data, pointing to stronger-than-expected growth also factored.
The Dow held the lead from the start thanks to a surge in its top-weighted component. Shares of Visa soared 10.2% in reaction to a bottom-line beat and news of a $5 billion buyback. Visa's peer, MasterCard also had a strong showing, spiking 9.4%, after it too surpassed earnings estimates.
However, the two names were unable to push the technology sector ahead of the broader market as other influential components like Apple, Facebook, and Microsoft underperformed.
Chevron and ExxonMobil ended little changed ahead of their quarterly reports.
The FOMC statement on Wednesday was deemed surprisingly hawkish on U.S. monetary policy. The Fed ended its monthly bond-buying program (quantitative easing), which was expected. However, the FOMC statement emphasized the improving U.S. economy, which led many to believe U.S. interest rates will be raised in 2015. The majority of traders and investors were looking for a dovish lean from the FOMC statement.
Relatively robust economic data pushed up stock prices. The U.S. economy grew 3.5% in the third quarter, bolstered by a surge in exports and federal spending. The report further undermined the safe-have gold market.
The U.S. dollar index has posted a solid rally in the wake of the FOMC meeting and hit a three-week high on Thursday. The greenback is hovering near a four-year high. Meantime, Euro currency prices slumped on the FOMC statement.
In overnight news, the Euro zone got another downbeat economic report on Thursday. EU consumer confidence came in at a reading of minus 11.1 in October from minus 11.4 in September. The report met market expectations but is another reminder of the ill economic health of the European Union, which is the world's third-largest economy.
Treasuries notched their highs right after the GDP report before spending the session in a steady retreat. The 10-yr yield slipped one basis point to 2.31%.
Today's participation was ahead of average with 730 million shares changing hands at the NYSE.
Tomorrow, September Personal Income (consensus 0.3%), Personal Spending (consensus 0.1%), Core PCE Prices (expected 0.1%), and the Q3 Employment Cost Index (expected 0.5%) will all be released at 8:30 ET while the Chicago PMI report for October (consensus 60.0) will cross the wires at 9:45 ET. The day's data will be topped off with the final release of the Michigan Sentiment survey for October (expected 86.4).
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