Global economy strengthens, exchanges are satisfied

On the world stock exchanges and in the second week of the new year, stock prices have grown considerably, with Wall Street reaching new record levels, as investors are optimistic about the growth of the world’s largest economies and company earnings.

On Wall Street, Dow Jones rose 2 percent to 25,803 points last week, while S & P 500 jumped 1.6 percent to 2,786 points and Nasdaq 1.8 percent to 7,261 points.

The new record ranges of these indices are due to the signs of boosting US spending, which will support further growth of the economy.

Last week, retail sales in the United States grew 0.4 percent, so stocks in the consumer goods and merchandise sector were on the investor’s side.

Market support also provided indications of stable and even accelerated growth of the world’s largest economies from China and Japan to the eurozone, while inflation remains low, meaning that central banks in the world will not rush with the tightening of monetary policy.

Investors focused on banks at the end of the week as JPMorgan Chase and Wells Fargo opened the quarterly announcement of quarterly business results at Wall Street, where both banks reported better than expected earnings.

“The fact that banks exceeded earning expectations is a good sign for the rest of the business results season,” says William Lynch, director at Hinsdale Associates.

After initial business reports, analysts estimate that earnings from S & P 500 index companies rose by 12.1 percent in the last quarter of the year, compared to the same period a year earlier, while only 11.8 percent expected the day before.