If you want some stock trading education on the type of news that causes the value of these equities to push higher, then the strong economic data released on June 13 and its impact serves a great lesson.
The benchmark S&P 500 Index had a very strong day, as it surged 1.5 percent to close at 1,636.40 at 4 p.m. in New York, according to Bloomberg.
While the materials and discretionary components of this key group of stocks had the strongest gains, all 10 sectors moved higher, The Wall Street Journal reports. The Dow Jones Industrial Average, another key index, also appreciated, finishing the day 0.8 percent higher at 15,109.
All eyes on data
The importance of economic data has been noted by market experts, who are observing that everyone is worried about the future monetary easing plans of the Federal Reserve, and are therefore paying close attention to this data, as they believe it could help predict what the central bank will do, according to the news source.
"The economy around the globe is slowing down so U.S. investors are certainly watching the data and hopefully see signs that the U.S. is not joining their friends in Europe and emerging markets," Wayne Wilbanks, chief investment officer at Norfolk, Virginia-based Wilbanks, Smith & Thomas Asset Management LLC, which has $2.5 billion under management, told Bloomberg by phone. "As markets get higher and higher, they can't decide, 'is the game over?'
The investing expert noted that people do not want to lose out on potential gains if the market keeps going up, but they are also eager to take profits due to the robust increases experienced recently, according to the news source.
Impact of strong economic reports
The sentiment of these investors received a boost on June 13, as a Labor Department report indicated that during the prior week, the number of initial applications for jobless benefits dropped by more-than-expected to 334,000 from the previous figure of 346,000, The Wall Street Journal reports.
In addition, there was a 0.6 percent decline in retail sales in May compared to the month before, according to Bloomberg. This figure provided by the U.S. Department of Commerce was the largest in three months. It also surpassed the median forecast of economists participating in a poll conducted by the media outlet, which called for a 0.4 percent climb in this key economic indicator.
"It's undeniable that the series of data are getting better," Chris Bertelsen, chief investment officer at Sarasota-based private wealth manager Global Financial Private Capital, told the news source during a phone interview. "The only issue for the market is we're in a vacuum month."
He elaborated on this term, indicating that markets do not have much information to digest, the media outlet reports.
"In other words, there are no earnings, there is nothing to latch onto other than an occasional number here and there and people are worried about the Fed tapering," Bertelsen stated.
Federal Reserve stimulus
Market participants have been speculating for months when the current regimen of monetary stimulus being used by the Federal Reserve will be changed. Since late last year, the organization has been purchasing $85 billion worth of debt-based securities every month. In addition, it has kept interest rates close to record lows for years.
These aggressive measures are being used in an effort to help stimulate the economy and bring the job market back to a healthier state. In recent weeks, several Federal Reserve officials have made public statements about the future of the stimulus.
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