Markets awash in low-inflation optimism

Two key monthly reports were
released this morning. While the
US GDP continued to grow at 4.8%
last month, wage growth was still
reasonable, at 0.8%, under-shooting
estimates of at least 0.9%. The
GDP price indicator rose 0.9% –
lower than an expected 1.5%.

When the Federal Reserve meets
on Nov. 6 to consider inflation
and consequent interest-rate
hikes, these reports will be key
variables in their decisions.

Every major index in North
America inflated by at least 1.5%.
They were all led by the Dow which
sucked up 2.1%, or 227.64 points,
to close at 10,622.53 after two
weeks of mostly downward pressure.

The S&P also gained 45.72
to 1342.43. Nasdaq was held up by
recent poor earnings reports from
Internet companies, but still, most
tech stocks rose. The index
grabbed 72.88 points, closing at
2875.40. Gainers outpaced
decliners by 11 to 8 on that
index, and by a margin of 21 to
10 on the NYSE.

Not surprisingly, banks and
brokerages outpaced all other
sectors. The Bloomberg Wall
Street Index, for example, rose
by 6.3%, it’s biggest one-day gain
since last October. It is comprised
of stocks like Goldman and Sachs,
which took on US$7 1/8, to $71
1/2, J.P . Morgan, which
added US$3 3/8 to $131 7/8, and
Citigroup, which inched up
US$2 1/2 to $53 13/16.

In Toronto, it was the same
story. The index swelled by 103.19
points, to close at 7114.66, and
10 of the 14 indices were up, lead
somewhat by the financials, but
also by the media and
communications sector.

The ME was up 70.36 to 3775.37.
BCE Inc., which beat its
earnings report yesterday closed
at C$86.25, up $3.50. Conglomerate
JDS Uniphase added C$10.10
to $224.60 as well, and
Seagram Co. took on C$3.70.
The VSE finished down. It dropped
0.48 to 395.08. The ASE gained
27.67 to 2834.01.