U.S. Stocks Fluctuate as Visa Rises Amid GDP, Claims Data

By Srinivasan Sivabalan and Trista Kelley  

Oct. 30 (Bloomberg) -- Robert Michele, global FICC chief investment officer at JPMorgan Asset Management, and Bloomberg’s Lisa Abramowicz, discuss the end of quantitative easing by the Federal Reserve and how it may affect the bond and equity markets. They speak on “Bloomberg Surveillance.”

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• U.S. Economy Grows 3.5%; Jobless Claims Fall to 281,000

U.S. stocks fluctuated, as a rally in Visa Inc. offset data showing faster-than-estimated growth that fueled speculation the economy is strong enough for the Federal Reserve to raise interest rates next year.
The Standard & Poor’s 500 Index (SPX) fell 0.1 percent to 1,981.35 at 9:37 a.m. in New York. The Dow Jones Industrial Average rose 81.46 points, or 0.5 percent, to 17,055.77, as Visa Inc. surged 8.6 percent. Visa is the Dow’s largest member by weighting.
“The Fed is affecting the mood,” said Patrick Spencer, head of U.S. equity sales at Robert W. Baird & Co. in London. “They’re basically saying everything is on
track for the best case in the economy, but maybe the first interest-rate hike will get closer, and that might worry people.”
The S&P 500 slid 0.1 percent yesterday after the Fed ended its quantitative easing program, indicating the U.S. economy is on a stable growth path. Officials said labor market conditions “improved somewhat further,” and that a range of indicators suggests that “underutilization of labor resources is gradually diminishing,” modifying earlier language that referred to “significant underutilization.”
The central bank reiterated its commitment to keep interest rates low for a considerable time until inflation increases toward its goal.
Data today showed fewer Americans filed applications for unemployment benefits over the past month than at any time in more than 14 years, a sign the strengthening U.S. economy is buoying the labor market.

GDP Report

A separate report indicated the economy in the U.S. expanded more than forecast in the third quarter, capping its strongest six months in more than a decade, as gains in government spending and a shrinking trade deficit made up for a slowdown in household purchases.
Equity futures erased a gain of as much as 0.4 percent, heading lower with European stocks, after the head of the euro region’s banking authority said the end of recent stress tests on banks won’t lead to an immediate boost in lending.
Concerns that Europe will slip into a recession just as Fed bond buying ends sent the S&P 500 down 7.4 percent from an all-time high of 2,011.36 in mid-September through Oct. 15.
The index then rallied to within 1.5 percent of its record on speculation the Fed would remain accommodative even as the U.S. economy picked up steam.