The Dow industrials closed above 16,000 for the first time on Thursday as stocks rebounded from three days of weakness, after economic data pointed to a slowly improving labour market and subdued inflation.
Financial shares led the market to its first day of gains after three sessions of losses. Although investors remain unsure about the timing of the Federal Reserve's scaling back of its $85 billion per month in bond buying, some say the market will weather the eventual pullback in that stimulus.
James Bullard, president of the Federal Reserve Bank of St. Louis and a voting member of the FOMC, said on Thursday that the inflation data gives the central bank some leeway to keep the current accommodative policy in place.
"What we need to do is continue with the program for now as we have, but if an inflation problem starts to develop, we have to be willing to move to arrest that problem," Bullard told a University of Arkansas event. "At that point, I'd put on my inflation hawk hat and spring into action."
Expectations that the Fed could start cutting stimulus - but without raising interest rates - have helped to widen the spread between long- and short-run debt. That benefits banks, which make money borrowing at short rates and lending at longer rates.
Source: Reuters
