US equities edged up Tuesday sending benchmark indexes to five-year highs, as earnings topped street estimates and investors looked ahead to President Barack Obama’s State of the Union address in the evening.
In economic news, the US Treasury reported a budget surplus of $2.9 billion for January, beating estimates of a $2 billion deficit.
Overseas, finance ministers of G7 countries pledged to have market determined exchange rates and committed to focus fiscal and monetary policies on domestic issues, rather than targeting exchange rates.
Tuesday proved to be a busy day for US Fed officials. Voting member E. George, the sole “no” vote at the FOMC meeting last month, said the economy is put at risk when the central bank starts to sell the same securities it is buying.
Also, President Obama will deliver the State of the Union address at 9 pm in Washington. The markets expect him to make new proposals for spending on infrastructure, education and clean energy.
On his part, the president is expected to argue that spurring economic growth remains the best strategy to narrow the federal budget deficit that has exceeded $1 trillion in each of the last four years.
The Dow Jones Industrial Average (DJIA) jumped 47 points and the S&P 500 Index (SPX) rose 2 points with financials gaining the most and technology faring the worst among its 10 business groups.
Yields rose as Treasuries fell for a second day after the US government posted a January budget surplus for the first-time in five years, indicating higher revenue from individual income and payroll taxes.
Meanwhile, the Japanese yen witnessed wild swings Tuesday following a statement on exchanges rates issued by the Group of Seven nations.
Initially the yen plunged against 16 of its most traded rivals initially, but rallied later after a G7 official said markets had “misinterpreted” the statement and it actually indicated worries about the excessive moves in the yen, sending the currency higher against rivals.
Across the Atlantic, European stocks rebounded, erasing Monday’s losses as Barclays announced cost-cutting measures and Spanish stocks edged higher following upbeat comments from ECB President Mario Draghi.
The Stoxx Europe 600 index jumped 0.5 percent to end at 287.07 after sliding 0.6 percent yesterday.
Our Trend Tracking Indexes (TTIs) again offered a mixed picture with the Domestic TTI barely changing at +3.13% while the International TTI gained some momentum and settled at +11.34%.
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