What Fueled the Dow's Explosion?http://www.fool.com/investing/general/2012/10/01/what-fueled-the-dows-explosion.aspx John Maxfield
October 1, 2012
Investors are cheering news today that domestic manufacturing expanded in September after most economists had expected it to contract. With only an hour left to trade, the Dow Jones Industrial Average (INDEX: ^DJI ) is up an impressive 120 points, equating to a 0.9% gain.
Why the Dow's up
Also fueling the markets today are comments by U.S. Federal Reserve Chairman Ben Bernanke about the central bank's resolve to press forward with monetary stimulus. Speaking to economists in Indianapolis, Bernanke noted, "We expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens."
These upbeat developments contrast sharply with related news from around the world. In the U.K., an analogous purchasing managers' index shrank to 48.4 in September, down from 49.6 in August. And data out of China suggests that manufacturing activity there has contracted now for an 11th straight month.
It's for these reason that a bond analyst told Bloomberg that "manufacturing in the U.S. looks surprisingly good against a backdrop of weak performance in China and the euro area and the looming fiscal cliff."
What's ahead for the week?
As my colleague Alex Dumortier noted, numerous central banks from around the world convene their quarterly monetary policy committees this week to decide on whether or not to take further actions to spur their respective economies. In the month of September alone, central bankers in Europe, Japan, China, and the United States all implemented new rounds of monetary stimulus, leading some to term the seemingly related moves a