Tags: stocks | market | investing | Federal Reserve

Stocks Slip, Trimming Strongest Monthly Gain in Four Years

Friday, 30 October 2015 04:32 PM

U.S. stocks faded late in October’s final session, paring the strongest monthly gain since 2011 as financial and consumer staples shares retreated.

The S&P 500 declined 0.5 percent to 2,079.43 at 4 p.m. in New York, with the gauge up 8.3 percent this month. Stocks are also extended to five their longest streak of weekly advances this year.

“Recent Fed comments have been a little more hawkish, and we didn’t get further easing from the Bank of Japan,” said Matt Maley, an equity strategist at Miller Tabak & Co LLC in New York. “It’s not like the market is falling out of bed, but when you combine that with how much we’ve been up lately, it gives us an excuse to pull back. We just had this huge rally — pulling back is normal and healthy.”

Analysts project profits for S&P 500 members dropped 3.9 percent in the third quarter, improving from an estimated 6.1 percent decline a week ago, following better-than-forecast results from Chevron and Exxon Mobil. With about two-thirds of companies in the index finished with reporting this season, 75 percent have beaten profit projections, while only 44 percent have exceeded sales estimates.

The S&P 500 had rebounded nearly 12 percent from its August low, spurred by gains in energy and technology shares — the same groups that helped drag the index to its worst quarter since 2011. Both are now headed for their strongest monthly increase in four years amid easing concern that weakness in China will spread.

Fed Watch

Central banks have dominated markets this month, with a weak U.S. jobs report jolting equities out of a summer swoon and sinking the dollar on speculation the Federal Reserve would keep interest rates pinned near zero into 2016. Persistent signs of weak global growth prompted the European Central Bank to hint at potential extra stimulus, while China unexpectedly cut its lending rate.

Fed officials said this week that U.S. growth was moderate, and they will evaluate progress in the labor market and inflation readings when considering whether to raise rates at their next meeting in December. Traders have now shifted their bets on the likelihood of a December increase -- pricing in a 50 percent chance of liftoff by year end, compared with as low as 30 percent last week.

An earlier report today showed household spending rose less than forecast in September, with the smallest gain since January. Separate data showed wages and salaries rose in the third quarter at a faster pace, while another report showed consumer sentiment increased less than forecast in October as Americans viewed buying conditions as less favorable than they did earlier in the month.

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U.S. stocks faded late in October's final session, paring the strongest monthly gain since 2011 as financial and consumer staples shares retreated.
stocks, market, investing, Federal Reserve
Friday, 30 October 2015 04:32 PM
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