By HY Markets Forex Blog

U.S. stocks broke into new territory on Sept. 18, as both the Dow Jones Industrial Average and the S&P 500 Index attained all-time highs.

Stock indices climb
The Dow closed up 0.5 percent at 2,011.39 at 4 p.m. in New York, while the Dow finished the session 0.6 higher at 17,265.99, according to Bloomberg. While these benchmark indices reached new peaks, the Russell 2000 Index and Nasdaq Composite Index also appreciated, gaining at least 0.5 percent.

These equity gauges moved higher after the Fed made its latest statements on policy on Sept. 17, indicating the central bank may keep benchmark rates close to current levels for some time after it concludes quantitative easing. The Federal Open Market Committee statement specified that inflation would also play a key role in the the central bank’s decision to move key borrowing costs higher.

In addition, policymakers changed their prediction for where the benchmark rate will be at the end of next year, Bloomberg reported. They recently gave a median forecast that the borrowing cost would reach 1.375 percent, higher than the 1.125 percent they estimated in June.

Investors eye Fed’s interest rate timeline
Up until the last few months, investors were largely interested in the timeline the Fed would use to taper QE. The central bank had been purchasing $85 billion worth of debt-based securities every month between late 2012 and the end of 2013. At the start of this year, the financial institutions cut this pace to $75 billion per month and then continued to gradually lower these transactions. Now that these monthly bond purchases have moved far lower in volume, market participants have become preoccupied with the timeline the central bank will use to bolster its benchmark borrowing costs.

“The market’s still in Fed mode,” Joe Bell, a senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., told Bloomberg. “A majority of people are thinking July 2015 may be the rate increase and the market’s responding positively to the idea that rates aren’t coming any sooner.”

“Anytime the Fed speaks it can move markets and it’s more true today than ever because we’re at an inflection point where non-traditional monetary policy that’s almost been on auto pilot is coming to a close and we’re shifting our focus to traditional policy,” Ron Sanchez, who works for Fiduciary Trust Co. International as executive vice president and chief investment officer, told the news source.

US jobless claims plunge
Another major development that coincided with rising stocks was the Labor Department data showing that during the week ending Sept. 13, the number of unemployment claims fell by 36,000 to reach 280,000. The four-week moving average also declined, dropping 4,750 to 299,500. Many believe this particular measure provides a better view of the labor market’s strength, since it is less volatile than the weekly reports.

The plunge in weekly jobless claims surpassed the median forecast of a decline to 305,000 provided by economists participating in a Reuters poll. After the Labor Department reported this sharp drop in initial applications for unemployment benefits, one expert asserted that the lackluster job creation happening in August was simply the jobs recovery hitting a rough patch.

“These data strongly suggest that the slowdown in payroll growth in August was a misleading indicator of the pace of job creation,” John Ryding, chief economist at RDQ Economics in New York, told the news source.

The U.S. labor market has followed a path of gradual improvement this year, having several months where the nation’s employers added more than 200,000 net positions. In addition, the unemployment rate has gradually tracked lower, recently falling to 6.1 percent.

Mid-Atlantic manufacturing continues to expand
In addition to the gradual improvements in the labor market, the Philadelphia Fed’s business activity index indicated continued expansion in the Mid-Atlantic region’s manufacturing in September, according to Reuters. While the measure dropped to 22.5 during the month from 28.0 in August, it remained above zero, denoting an increase in factory activity.

In addition, new orders moved higher month-over-month in September, and factory employment reached its highest level since May 2011, the media outlet reported.

Analyst predictions
Amid the aforementioned economic developments, analysts at U.S. Bank Wealth Management have weighed in on where they believe stocks will go next, according to CNBC. For example, Jim Russell, senior equity strategist for U.S. Bank Wealth Management, said the S&P 500 could reach 2,060 this year.

However, analysts at U.S. Bank Wealth Management are aware of “earnings projections slightly below consensus, and a little concerned weak economic growth in Europe might have a headwind for the third and fourth quarters,” the media outlet reported.

Investors who trade stocks online might benefit from knowing about the Dow and S&P 500 hitting all-new highs on Sept. 18. This appreciation, as well as the developments that surrounded it, could help these market participants make better-informed decisions.

The post US Stock Indices Reach New Record Highs… appeared first on | HY Markets Official blog.