Market Review By TraderXP:
Benchmark stock of China (SSE Composite Index - also known as the Shanghai Composite) rose for the third time in four days as the profit for banks and consumer goods shadow losses for steel companies.
"This is the beginning of the potential rebound in the stock market after China's stocks fell so much this year," said Zhang Gang, a strategist at Central China Securities Holdings Co in Shanghai. "The economy has shown signs of recovery, and there are expectations of political reform. If politicians do materialize, we will see a second wave of profit."
Market News
Large technology improves S & P 500 closed at its best, because elections
Shares rose on Tuesday, led by gains in technology companies, helping S & P 500 end at the highest level, since election day.
2.2 percent increase to $ 541.39 on the stock of Apple lifted Nasdaq, as the largest U.S. company by market value rebounded from a week in which investors took profits before nextyear possible tax increase. Prior to trading on Tuesday, Apple shares have lost 25 percent of the time intraday high hit in September.
Shares than some profit by the end of the day, all the news on the "financial cliff" talks emerged. U.S. Senate Majority Leader Harry Reid said it would be difficult to reach an agreement addressing the cliff tax hikes and spending cuts before Christmas.
"There has been an explosion in the concern about this thing. Because markets are what they are, you have people just step back," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
"There's a huge lack of liquidity in the market," he said.
S & P 500 lost 5.3 percent in seven sessions after election day, as investors refocused on the threat posed to the economy, the financial cliff, a series of automatic spending cuts and tax increases. Markets generally recover these losses, but volume was thin, suggesting investors are not betting aggressively due to the uncertainty.
Index Dow Jones Industrial Average rose 78.56 points, or 0.60 percent, to 13,248.44. 500 Index Standard & Poor was up 9.29 points, or 0.65 percent, to 1,427.84. The Nasdaq Composite Index rose 35.34 points, or 1.18 percent, to 3,022.30.
Volume was about 6.43 billion sharestraded on NYSE, Nasdaq and NYSE MKT, compared to the year before the date of closing of the average daily volume of about 6.5 billion dollars.
Other big tech stocks also rose. Texas Instruments gained 4 percent to $ 31.01 after bumping their profit targets late Monday. This helped to rally other chips PHLX Semiconductor index up 1.9 percent. Microsoft rose 1.4 percent to $ 27.32.
Lack of demonstrable progress in the negotiations of the financial cliff kept investors from taking aggressive bets inrecent weeks.
Republican House Speaker John Boehner urged President Barack Obama to offer a counter-proposal on Tuesday.
Retailers like luggage maker Tumi Holding Inc and Michael Kors was holding on Tuesday after a positive opinion fromGoldman Equity Research Sachs. Tumi was up 4.7 percent to $ 21.92, and Michael Kors received 2.4 percent, to $ 50.92.
In contrast, the discount retailer DollarGeneral and family dollar fell. Dollar General, whose shares fell 7.8 percent to $ 42.94, said he could see the fields under pressure in 2013. Family Dollar shares fell 8.4 percent to $ 64.68.
SPX Corp shares fell 9.1 percent to $ 62.07, while shares had the biggest percentage decliner on the New York Stock Exchange, after sources said the company is in exclusive talks to buy rival Gardner Denver, in a merger, which can create a conglomerate of machines from the market value of more than $ 7 billion.
The U.S. Treasury sells its remaining stake in the shares of the insurer American International Group Inc. AIG were up 5.7percent to $ 35.26.
Fed began a two-day policy settingmeeting Tuesday. The central bank is expected to announce a new round of bond purchases ofTreasury when the meeting ends on Wednesday in order to replace it with "Operation Twist" incentive, which expires at the end of this year.
Advanced outnumbered decliners on theNYSE about 2 to 1, and on the Nasdaq by nearly 9 to 4. Reuters.com
Currencies
Dollar under pressure as market eyes Fed stimulus
The dollar came under pressure on Wednesday, hovering near a multi-month low against the higher-yielding currencies as markets bet the U.S. Federal Reserve will announce more stimulus later in the day.
The euro was also buoyed after surprising strength in the German economic sentiment, which contrast with recent signs that concerns about the financial rocks hurt the U.S. economy mood.
There was limited reaction in the major currencies, after North Korea launched a missile, which critics say is a disguised ballistic missiletest, as the news had little immediate impact on the world economy.
"The Fed aims to take preventive action on the economy, given how the Fed started QE3. Given the concerns about the financial cliff, I think the Fed will do what is discussed in the markets," said Hideki Amikura, a currency manager Nomura Trust Bank.
"In this case, the euro / dollar should continue to grow," he added.
The dollar index was 80.04. DXY, flat from late U.S. levels, but 0.5 per cent so far this week, the euro jumped back above $ 1.3000, pulling away from a two-week low around $ 1,2876 plumbedFriday.
The Fed, which concludes a two-day policy meeting later Wednesday, is expected to replace the expiring program of its "Operation Twist" with a new round of direct purchases of bonds.
Many economists believe that the U.S. central bank will announce monthly purchases of debt of $ 45 billion.
"In spite of the view that the Fed will move to the direct purchase of Treasury bonds are now widely shared by the participants of the market, we do not think it has been fully reflected in the markets or in the positioning," said Vassili Serebriakov, strategist at BNP Paribas.
The euro was last at $ 1.3007, as a follow up 50 percent of its December 5-7, falling from $ 1.3127 to $ 1.2876, and keep after unexpectedly strong growth in Germany on Tuesday ZEW index of economic sentiment.
Morale among German analysts and investors have dramatically improved in December, fanning hopes that Europe's largest economy may avoid a recession this winter, despite the gloomy news from other parts of the region.
This contrasts with the fall in consumer confidence in the U.S., data showed last Friday posted the largest drop since March 2011 in November amid concerns over the financial crisis.
Many investors expect the U.S. political leaders to finally reach an agreement to reduce the planned fiscal tightening, but there was no concrete evidence of progress so far, with topRepublican lawmakers rejected a new proposal by President Barack Obama on Tuesday.
Thirsty OUTPUTS
The specter of further easing in the U.S. puts a new emphasis on higher-yielding currencies.
The Australian dollar hit a three-month high of $ 1.0541 and last stood at $ 1.0533, near the end of the U.S. level.
"Aussie remains one of the few currencies to the output so investors have no choice but to buy," said a trader at a European bank.
The Canadian dollar was near seven-week high of C $ 0,9858 per dollar hit on Tuesday, while the New Zealand dollar also stood at a nine-month high of $ 0.8398.
The Australian dollar also hit 8 1/2-month high 87.01 yen as the yen was hurt by speculation that the Bank of Japan will take more aggressive measures to mitigate the probability of victory after the Liberal Democratic Party in elections in the country on Sunday.
The leader of the LDP's Shinzo Abe called for unlimited easing. The Bank of Japan is expected to expand its asset purchase program and credit policy meeting next week.
In relation to the U.S. dollar, the yen was little changed at 82.55 yen, not far from the 7 1/2-month peak 82.84 yen hitalmost three weeks ago. Reuters.com
