US stocks performed beyond all expectations today after back to back losses. The S&P 500 registered two stocks with gains for every one that had lost out. Investors cited manufacturing data as their primary reason for displaying faith in the markets.
The day’s biggest losers were Staples Inc, whose stock fell by 15% after they were forced to lower their targets for the quarter amid poor sales reports. This came as a shock to many investors after recent retail data suggested that the industry as a whole was performing well. Deere & co were also amongst the worst performers, dropping 6.9% after releasing less than satisfactory profit reports.
Abercrombie & Fitch lead the way with gains of 8.2%, an advance that was matched by JDS Uniphase corp. Both organisations released better-than-expected financial data, causing their stocks to rally.
Federal Reserve Guessing Game
Investors are currently trading based on their views of what the Federal Reserve will do when they meet on the 31st of August. The US central bank are expected to provide some sort of stimulus for the economy based on today’s manufacturing reports but exactly what action will be taken remains to be seen. Many have speculated at a fresh round of QE (quantitative easing); pumping large volumes of money into the economy in an attempt to spark it back into life.
However a lot can happen over the next two weeks to stop any such moves from the Federal Reserve. Over the last few days alone there have been two reports which would counter today’s announcement of a manufacturing decline. US vehicle production was up, something the state rate highly as a sign of growth. Additionally, energy usage was up for the month of July after heat waves hit the nation – forcing heavy use of air conditioning units and water supplies.