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Business News/ Market / Stock-market-news/  US stocks heading for biggest monthly advance since February
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US stocks heading for biggest monthly advance since February

The S&P 500 Index has added 3.6% in this month, poised for its best August performance since 2000

The Dow Jones Industrial Average decreased 14.11 points, or less than 0.1%, to 17,065.46. The Nasdaq Composite Index gained 0.3% to 4,572.53. Photo: AFPPremium
The Dow Jones Industrial Average decreased 14.11 points, or less than 0.1%, to 17,065.46. The Nasdaq Composite Index gained 0.3% to 4,572.53. Photo: AFP

New York: US stocks were poised for the biggest monthly gain since February amid improving economic data and speculation central banks will continue to spur growth. Benchmark indexes were little changed on Friday.

The Standard & Poor’s 500 Index has added 3.6% in this month, poised for its best August performance since 2000. The benchmark gauge rose less than 0.2% to 1,999.92 as of 3:30 pm in New York on Friday. Volume was 39% below the 30-day average at this time of day.

Economic reports showed consumer confidence unexpectedly rose in August, while consumer spending dropped in July for the first time in six months. Euro-area inflation slowed this month to the weakest rate since 2009, increasing pressure on the European Central Bank (ECB) to add stimulus. American equity markets will be closed on 1 September for the Labour Day holiday. In Ukraine, insurgents made more gains as Russia dismissed Nato allegations of its involvement.

“Today is a microcosm of what’s been going on all summer, a tug-of-war between geopolitical risk pulling one way, better economic data pulling a different way, and the bond market acting like it doesn’t care about anything but Europe," John Canally, chief economic strategist at Boston-based LPL Financial LLC, said via phone. “We’re seeing that play out on a slow end of summer day."

The Dow Jones Industrial Average decreased 14.11 points, or less than 0.1%, to 17,065.46. The Nasdaq Composite Index gained 0.3% to 4,572.53.

Slow Trading

With the US headed into the Labour Day holiday weekend, the stock market has been experiencing the slowest trading in at least six years. Volume has been below 5 billion shares in each of the past eight days, the longest stretch in data compiled by Bloomberg going back to 2008.

“Investors’ lack of exposure to equities is still what drives the market higher, along with valuations which aren’t stretched," Paul Atkinson, head of North American equities at Aberdeen Asset Management Plc in Philadelphia, said in a phone interview. The firm oversees $551.4 billion.

US household purchases decreased 0.1% after increasing 0.4% in June, commerce department figures showed. None of the 79 economists in a Bloomberg survey projected a decrease. Incomes climbed 0.2%, the smallest monthly advance this year.

Consumer confidence unexpectedly rose in August, showing a brightening in Americans’ moods as the labour market gains traction. The Thomson Reuters/University of Michigan final sentiment index rose to 82.5 from 81.8 in July. The median projection in a Bloomberg survey of economists called for 80.

European Stimulus

In Europe, consumer prices rose 0.3% in August from a year earlier after a 0.4% increase in July, the statistics office in Luxembourg said. Unemployment remained at 11.5% in July, Eurostat said in a separate report. ECB president Mario Draghi said in a speech at a conference in Jackson Hole, Wyoming that inflation expectations have deteriorated in the euro area and signalled policy makers are ready to add fresh stimulus.

“The ECB meeting is next week and Draghi kind of precommitted at Jackson Hole when he started talking about inflation being below their desired range," Paul Zemsky, the New York-based head of multi-asset strategies at Voya Investment Management LLC, which oversees $213 billion, said by phone. “If they don’t do something different, global markets will be disappointed."

Avago Technologies Ltd., a semiconductor-device supplier, climbed 7.7% to $82.28 for the biggest gain in the S&P 500 after it reported earnings that topped estimates.

Pacific Sunwear of California Inc., a clothing retailer, slid 9.6% to $2.08 after projecting losses in the third quarter that were deeper than analysts’ estimated.

Veeva Systems Inc., the provider of cloud-based business services, jumped 20% to $29.95. It boosted its year-end earnings prediction and reported second-quarter earnings that beat estimates. Bloomberg

Jonathan Morgan in Frankfurt and Lu Wang in New York also contributed to this story.

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Published: 29 Aug 2014, 07:48 PM IST
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