U.S. stocks moved higher on Tuesday, Oct. 28, causing the Dow Jones Industrial Average to rise past 17,000.
Major Indices Rise
The group of 30 industrial stocks gained 1.1 percent to 17,005.75, with 27 of its components appreciating, according to CNBC. This represented the fourth consecutive day that the Dow increased.
The S&P 500 Index also enjoyed gains, increasing 1.1 percent to 1,985.05, the media outlet reported. Elliot Spar, market strategist at Stifel, Nicolaus & Co., weighed in on the benchmark group of stocks’ recent movements.
“Those that missed their entry point of 1,905 on the S&P and then 1,925 are paying what? Just like on the downside when prices are sliding, price is not an object,” he wrote in e-mailed commentary, the news source reported. “This is especially so when you are in the last week of a quarter or in this case the last week of a fiscal year for some funds.”
Stocks Recover from Prior Sell-Off
Stocks of companies more modest in scope also moved higher during the day, as the The Russell 2000 Index surged 2.9 percent, according to The Wall Street Journal. Several sectors – which suffered losses earlier in the month – helped push the major indices higher on Oct. 28. David Lefkowitz, equity strategist with UBS Wealth Management, commented on the drop in stocks that happened earlier in October.
“We thought the sell-off was unfounded, and now people are buying into the notion that it wasn’t based on any change in the fundamentals,” he told the news source. “It’s very good for the stock market.”
Impact of Fed Speculation
Equities moved higher as global market participants prepared for the Federal Reserve to end the latest round of quantitative easing, according to the media outlet. Central bank officials have been winding down these bond purchases, which originally consisted of buying $85 billion worth of debt-based securities per month.
The Fed’s balance sheet has surpassed $4 trillion in the last several years, as the financial institution leveraged Open Market Operations in an effort to help speed up economic growth. At the same time, the organization cut its benchmark interest rates to almost zero, which has helped put downward pressure on borrowing costs on a broader level.
Fed policymakers scheduled a two-day meeting for Oct. 28 and Oct. 29, and many strongly believed that this event would coincide with officials ending QE3, The Wall Street Journal reported. Central bank stimulus has coincided with the Dow hitting 70 separate records between 2013 and 2014.
Some market participants are critical of Fed policy, asserting that it has done little more than help inflate the prices of different asset classes, according to the news source. However, after QE3 was announced in September 2012, the Dow has surged 26 percent, without suffering any pullbacks of at least 10 percent.
Investors who trade stock online might benefit from knowing about the speculation surrounding Fed policy, and the different views on how its stimulus impacts equity prices. Being aware of these key developments could help market participants make better-informed decisions.