On Wall Street, stock prices on Tuesday recovered some of the losses from the previous day, as better-than-expected economic data from the U.S. and soothing comments from the Chinese central bank encouraged investors.
The Dow Jones index strengthened by 100 points, or 0.69 percent, to 14,760 points, while the S&P 500 rose by 0.95 percent to 1,588 points, and the Nasdaq index increased by 0.82 percent to 3,347 points.
Investors were encouraged yesterday by better-than-expected data on durable goods orders, new home sales, and consumer confidence, indicating a strengthening U.S. economy.
Last Wednesday, Fed Chairman Ben Bernanke stated that the central bank could begin to reduce its accommodative monetary measures by the end of the year if the economy continued to strengthen, which caused a drop in stock prices as the market would lose significant support.
The good data from yesterday suggests that the Fed could indeed reduce its programs for purchasing government and mortgage-backed securities worth $85 billion per month, but as the economy strengthens, investors hope this could support stock price growth when the Fed reduces its accommodative measures.
“The first reaction to the Fed’s announcement has passed, we took a deep breath, and now we need to assess the new situation. The correction in stock prices since last Wednesday provided an opportunity for investors to re-enter the market,” says Mike Binger, portfolio manager at Gradient Investments.
