Home' Trinidad and Tobago Guardian : November 23rd 2014 Contents NOVEMBER 23 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG9
US stocks capped a week
that already had several
record highs by delivering
a couple more.
The Dow Jones industrial average and
Standard & Poor s 500 index carved out all-
time highs on Friday, extending the market s
gains for the week. It was the third record
close for the Dow in the week and the fourth
for the S&P 500.
The latest records extended a comeback
in the S&P 500, which has increased 11 per
cent since plunging in mid-October.
Investors on Friday cheered news of an
interest rate cut in China and the possibility
that Europe s central bank will step up stim-
ulus efforts in the region.
"What it suggests is that these central
banks are prepared to do even more to stim-
ulate growth, to stimulate demand, and that
always equates to better stock markets," said
Quincy Krosby, a market strategist at Pru-
All 10 sectors in the S&P 500 index rose,
with materials stocks climbing the most.
The sector is up 9.0 per cent this year.
Energy stocks were among the big gainers,
getting a boost from a rebound in oil prices.
Some traders anticipated that OPEC will
decide to cut production at a conference
Ross Stores led the gains in the S&P 500,
adding US$6.09, or 7.3 per cent, to
All told, the S&P 500 index rose 10.75
points, or 0.5 per cent, to 2,063.50. That s
just above the index s previous high close a
day before at 2,052.75. The S&P 500 is up
11.6 per cent this year.
The Dow gained 91.06 points, or 0.5
per cent, to 17,810.06. That s up from
its last record close of 17,719 on Thurs-
day. The Dow as gained 7.4 per cent
The Nasdaq composite added 11.10
points, or 0.2 per cent, to 4,712.97. The
index is up 12.8 per cent for the year.
A strong third-quarter earnings season,
on top of a recent string of positive USec-
onomic data on housing, jobs and manu-
facturing, have helped put investors in a
The prospect of central banks outside the
US ramping up their own stimulus efforts
is seen as another positive for stock investors,
particularly with the Federal Reserve winding
down its massive bond-buying programme
"Central bank intervention is the No 1
thing investors worldwide are looking at
right now," said Mike Serio, regional chief
investment officer at Wells Fargo Private
Bank. "In the short run, that looks pretty
good for stocks."
On Friday, China s central bank lowered
the interest rate on its one-year loans to
financial institutions by 0.4 per centage
points to 5.6 per cent. The surprise cut came
in the wake of recent figures showing that
the country s annual growth rate slowed to
a five-year low of 7.3 per cent last quarter.
European Central Bank President Mario
Draghi also caused a stir in markets when
he told a conference in Frankfurt, Germany,
that the bank is willing to "step up the pres-
sure" and increase its efforts to stimulate
Europe s struggling economy.
If current efforts do not achieve the
desired effect, Draghi said the ECB could
"broaden even more the channels through
which we intervene."
For many in the markets, that was a clear
hint that the bank could soon starting buying
Beyond the talk of central bank stimulus,
investors had their eye on the latest batch
of corporate earnings Friday.
Traders bid up shares in several companies
that reported better-than-expected earnings,
including software maker Splunk and sport-
ing goods retailer Hibbett Sports. Splunk
rose US$1.99, or 3.1 per cent, to
US$66.93. Hibbett gained US$1.82, or
4 per cent, to US$47.75.
Video game retailer
GameStop and clothing
chain operator Gap slumped
after delivering disappoint-
ing results. GameStop slid
US$5.68, or 13 per cent,
to US$37.86. Gap fell US$1.68, or 4.2 per
cent, to US$38.46.
Wireless communications company Aruba
Networks sank 13.7 per cent after its outlook
fell short of financial analysts expectations.
The stock shed US$2.98 to US$18.82.
China s interest rate cut raised hopes for
increased economic activity and oil demand.
That helped lift oil prices.
Benchmark US crude gained 66 cents
to settle at US$76.51 a barrel in New
York. Brent crude, a benchmark for inter-
national oils used by many U.S. refiner-
ies, rose US$1.03 to close at US$80.36
on the ICE Futures exchange in London.
In other energy futures trading on the
NYMEX, wholesale gasoline rose 2.9 cents
to close at US$2.057 a gallon, heating oil rose
2.5 cents to close at US$2.405 a gallon and
natural gas fell 22.3 cents to close at US$4.266
per 1,000 cubic feet.
In metals trading, gold rose US$6.80
to US$1,197.70 an ounce, silver rose 26
cents to US$16.40 an ounce and copper
rose a penny to US$3.03 a pound.
US government bond prices rose. The yield
on the 10-year Treasury note fell to 2.31 per
cent from 2.34 per cent late Thursday. AP
China s central bank unexpectedly
slashed interest rates on Friday to
re-energise the world s No 2 econ-
omy, joining a growing list of major
economies that are trying to encour-
age growth in the face of a global
The president of the European Central Bank said
Friday he was ready to step up stimulus for the 18-
country eurozone economy, where growth is meager
and unemployment is soaring. And Japan s govern-
ment this week delayed a tax increase after the coun-
try slipped back into recession. Japan s central bank
late last month increased its purchases of government
bonds and other assets to try to revive growth.
News of China s actions and the ECB s hints of
further stimulus triggered a surge in stock markets,
particularly in Europe. Germany s DAX rose 2.6 per
cent, while the Dow Jones industrial average rose
0.5 per cent to close at a record high. Asian stocks
had closed before the Chinese announcements.
Friday s moves highlighted an increasing divide in
the global economy. The United States is showing
signs of steady growth, prompting the Federal Reserve
to rein in its stimulus efforts.
So far, the US has escaped any drag from the slow-
down overseas. Fed policymakers said at a meeting
last month that the impact on the US would be
Jay Bryson, a global economist at Wells Fargo
Securities, said the US is "relatively insulated" from
overseas developments. Exports are a smaller source
of growth than in other developed nations and many
major employers, such as health care and education
providers, are largely unaffected by overseas activ-
ity.The slowdown in global growth is becoming an
increasing concern for policymakers. Japan confirmed
this week that it has fallen back into recession and
will delay a tax increase to help consumer spend-
In Europe, it is not only weak growth but also the
low inflation rate that is worrying the ECB. Low
inflation or an outright drop in prices can weaken
an economy further by encouraging delays in spend-
ing and investment. The economy of the 18-country
eurozone grew by a scant 0.2 per cent in the third
quarter compared with the previous three months.
As indicators for the eurozone and global economy
disappoint, ECB President Mario Draghi was firm
in his message: "We will do what we must to raise
inflation and inflation expectations as fast as possible,"
he said in a speech in Frankfurt.
Of major economies, only the US is considering
raising interest rates. The Federal Reserve only recently
ended a massive bond-buying programme that helped
reduce market interest rates because the economy
But the prospect of higher rates in the US is expos-
ing the country to a potentially painful rise in the
dollar---currencies tend to strengthen with higher
rates. The dollar hit a seven-year high against the
yen, and jumped almost 1.0 per cent against the
euro on Friday. A stronger dollar makes it tougher
for US exporters to sell their goods international-
ly.The People s Bank of China said it is trying to
address "financing difficulties" caused by a shortage
of credit. It also said the move was not a change in
monetary policy and economic conditions are within
an "appropriate range."
China s economic growth fell to a five-year low
of 7.3 per cent in the latest quarter and manufacturing
and other indicators are declining. That has prompted
suggestions Beijing might intervene to prop up
chase growth amid
A Pakistani broker takes
a nap in a trading hall at
the Karachi Stock
Exchange (KSE) on
Thursday, November 20,
2014, in Karachi,
The KSE 100 Index
closed Thursday with
31,239.04, losing over
500 points, local media
Dow, S&P 500 push
further into record territory
The Dow climbed 91.06 points, or 0.5 per
cent, to 17,810.06.
The S&P 500 index added 10.75 points, or
0.5 per cent, to 2,063.50.
The Nasdaq composite rose 11.10 points,
or 0.2 per cent, to 4,712.97.
For the week:
The Dow rose 175.32 points, or about 1.0
The S&P 500 index rose 23.68 points, or
1.2 per cent.
The Nasdaq rose 24.43 points, or 0.5 per
For the year:
The Dow is up 1,233.40 points, or 7.4 per
The S&P 500 index is up 215.14 points, or
11.6 per cent.
The Nasdaq is up 536.38 points, or 12.8
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