New York: US stocks erased early losses to close in positive territory after traders were encouraged by confirmation that the Federal Reserve may soon provide more stimulus to boost economic recovery.
The markets have been on an upswing since the Federal Open Market Committee said following its last meeting on 21 September that the central bank was prepared to step in if the lagging recovery warranted it.
Yesterday, the three main stock indexes slightly dipped in the hours ahead of the release of the FOMC minutes, but stabilised following the reassuring news.
The blue-chip Dow Jones Industrial Average rose 10.06 points (0.09%) to 11,020.40 points in closing trades.
The broader S&P 500 index was up 4.45 points (0.38%) at 1,169.77 points, while the tech-rich Nasdaq composite index gained 15.59 points (0.65%) to 2,417.92.
“The market is in no-man’s land right now with the predominant theme being indecision,” said Michael James, equity trading manager at Wedbush Morgan
“I don’t think there was anything that was not known in what was disclosed in the Fed minutes other than to give a more definitive expectation on continued quantitative easing in the near future.”
Although the FOMC minutes provided no specific details on plans for any new stimulus, members generally agreed that such action would be swift if economic conditions warranted.
Most policy-makers agreed that an intervention “may be appropriate before long, but also made clear that any decisions would depend upon future information about the economic situation and outlook,” the minutes said.
Most analysts expect the easing measures to take place shortly after the next FOMC meeting in early November or at the latest in December.
The light-volume Wall Street trade that has characterised recent days could change in the coming days following the release of quarterly earning reports from market heavyweights, starting with Intel shortly after yesterday’s closing bell.
JPMorgan Chase was to publish its earnings report on today morning and Internet search engine giant Google the following day.
“You are more likely to see the market move one way or another more dramatically tomorrow after Intel’s and JPMorgan’s reports. Those will have a much bigger impact on market sentiment than anything we heard from the Fed,” said James.