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July 2, 2013

Market discounts Fed, pushes stocks higher

(Continued)

The S&P 500 closed at a record high of 1,669 on May 21. A day later, stocks began dropping after minutes of a Fed meeting were released suggesting the stimulus could be scaled back. The sell-off picked up pace June 19, when Bernanke laid out a possible road map for ending the bond purchases.

The S&P closed at 1,573 on June 24, almost 6 percent down from its record, before regaining some of its loss.

The index is still up 13.2 percent this year.

The market is more than twice as likely to gain as decline on the first trading day of a new quarter, according to data from S&P Dow Jones Indices. The index has risen 27 times and fallen 13 times during the past 10 years on the first trading day of the quarter.

“You’re seeing new money come in to the markets as we are in a new quarter,” said Quincy Krosby, a market strategist at Prudential Financial. “New money is being put to work.”

Eight of the 10 industry groups that make up the S&P 500 index rose, led by materials companies, a category that includes miners and chemical makers, and industrial companies. Utilities and phone companies were the only ones to decline.

This week’s most closely watched economic release will be the government’s monthly employment report Friday. Economists expect the U.S. added 165,000 jobs in June, a figure that would affirm the economy’s steady, but slow, trajectory, said Scott Wren, a senior equity strategist at Wells Fargo Advisors.

“It’s a confirmation of more of the same,” said Wren. “More modest growth, more modest inflation, but not a big acceleration.”

U.S. stocks also followed global markets higher. Japan’s Nikkei 225 rose 1.3 percent, boosted by signs of improvement in Japan’s economy.

In Europe, stock indexes rose after a mixed set of economic indicators for the region. While unemployment in the 17 countries that use the euro rose to another record high in May, manufacturing picked up in Britain, France and Italy and stabilized in Spain.

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