US stocks rallied yesterday after three days of losses as stronger-than-expected economic data helped reassure investors concerned about the expected winding down of the Federal Reserve’s economic stimulus.
Despite the rally, the S&P 500 failed to hold significantly above resistance at its 14-day moving average of 1,636.26. Support kicked in earlier in the day after the index traded below its 50-day average and again near 1,600.
Before the market opened, government data showed retail sales rose more than expected in May and first-time applications for jobless benefits fell last week, suggesting resilience in the US economy.
The market, which fell sharply on Wednesday, rose on the data, according to Ken Polcari, director of the NYSE floor division at O’Neil Securities. But he said stocks’ climb was also due to the overdone selling of previous sessions.
“I expect the S&P to test support again” near 1,600, Polcari said.
Stocks had fallen every day this week up until Thursday on concern central banks could soon begin to wind down their stimulus measures. Trader angst increased after the Bank of Japan decided not to take any new measures on Tuesday, triggering a sell-off in Japanese equities and a rally in the yen.
The Dow Jones industrial average rose 180.85 points or 1.21 per cent, to 15,176.08, the S&P 500 gained 23.84 points or 1.48 per cent, to 1,636.36 and the Nasdaq Composite added 44.94 points or 1.32 per cent, to 3,445.36.
New York Report