If you want some free stock trading education involving how markets respond to the statements of government officials, the stock rally that happened on June 3 is a perfect example.
U.S. equities rose during this day, pushed higher as investors responded to statements made by Federal Reserve Bank of Atlanta President Dennis Lockhart, as the official said that the voting members of the Federal Open Market Committee are devoted to maintaining a very strong stimulus package, according to Bloomberg.
The benchmark S&P 500 Index finished the day 0.6 percent higher at 1,640.42, while the Dow Jones Industrial Average gained 0.9 percent to close at 15,254.03, MarketWatch reports. The Nasdaq Composite also had a good day, rising 0.3 percent.
Mixed economic data
One major piece of news that helped bolster the hopes that the Federal Reserve will not change its stimulus is a report released by the Institute for Supply Manufacturing, which indicated that the nation's factory activity fell in May, according to Bloomberg. In addition, this part of the economy declined at the sharpest pace in four years.
Market participants will be looking to the jobs report scheduled for release at the end of the week for further information on the strength of the U.S. economy, Reuters reports. A recent survey conducted by the media outlet provided an average estimate that the nation's employers created 170,000 new positions in May, which is a slight uptick over the 165,000 jobs created in April.
Lockhart noted the visibility that the monetary easing plans of the Federal Reserve have been generating.
"There certainly seems to be an acute fixation on the timing of any adjustment to the asset purchase program and I guess I would just encourage everyone to not lose sight of the bigger picture," he stated in an interview with Bloomberg News.
He added that "Any adjustment is not a major policy shift." The Federal Reserve official also reiterated that the robust program of quantitative easing will be maintained.
The Federal Reserve official observed the tepid nature of the economic reports being released, stating that "The data we're receiving are still very mixed," according to the news source. He said that the existing information does indicate a business climate is particularly robust, and he cites the data provided in the ISM report to support this point of view.
The importance of the ISM report was noted by other market experts, as Fred Dickson, chief investment strategist at D.A. Davidson & Co., stated in emailed research that the indicator is a very reliable indicator that can be used to gauge the economy, and is not revised several times like many other pieces of information, according to MarketWatch.
The market expert noted that he has previously predicted that the growth rate of the U.S. economy would slow down in the second quarter, and asserted that the ISM report validates his previous estimate, the media outlet reports.
After gaining in May, the S&P 500's rally was extended to seven months, according to Bloomberg. Sam Stovall, S&P's New York-based chief equity strategist, wrote in a note that observing the past history of the index, it could rise in value during the month of June.
"Could sell in May have started in the end of the month, rather than the usual? One could easily infer that from the performance of the last three days," the strategist said, citing the 1.8 percent plunge that the S&P had during the last sessions in May. "However, history says, but does not guarantee, that the S&P 500's performance in June could surprise to the upside."
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