New High for Standard and Poor 500 (Bloomberg)
Financial stocks pushed the S&P 500 to a new record Friday, as the day’s bank earnings surprised market analysts. This market index has risen from its June 24 low through strength in the housing market and confidence in continuing quantitative easing. Economic data has largely quelled fears of Federal Reserve tapering its current policy of quantitative easing. “The Fed’s hope is that investors shift over time from liquidity-driven strength to economy-driven strength,” James Gaul, a portfolio manager at Boston Advisors LLC, said. “I don’t know if we’ve seen true economic strength here yet, but we’re a lot closer than we were a couple of years ago.”
Gold Price Takes a Hit (CNBC)
After taking heavy loses early Friday, gold futures settled at $1277 per ounce. Analysts see the records posted by prominent U.S. market indices yesterday as a threat to gold-backed exchanged-traded funds (ETFs). “The fact that the leading U.S. equity indices closed at record highs yesterday — which could prompt investors to switch once again from gold ETFs to equities — is problematic for gold,” said Eugen Weinberg, head of commodity research at Commerzbank.
Philadelphia Fed President Calls for Tapering (Bloomberg)
Charles Plosser, President of the Federal Reserve Bank of Philadelphia, called for the gradual tapering of quantitative easing on Friday, suggesting that this tapering should begin in September and that monetary stimulus should be eliminated by the end of the year. “I don’t want to do it all at once, but I think we should begin to taper very soon and hopefully end it by the end of this year,” Plosser said. “That would be a healthy thing for the economy. We can do it gradually.”