INVESTORS in American stocks will be looking to Washington this week, awaiting key jobs data and minutes from the United States Federal Reserve's (Fed) most recent meeting, when it decided to cut its unprecedented monetary stimulus.
Minutes from the Fed's December 17-18 meeting, when the central bank announced its plan to reduce monthly asset purchases by US$10 billion (RM32.85 billion) to US$75 billion, could give further insight into the reasons behind the decision and offer clues about how quickly it will wind down the stimulus.
Stocks rallied following the decision because it confirmed to many that the US economy was on firmer footing and ended uncertainty over when the Fed would finally reduce its stimulus, which was the key driver of the S&P 500's nearly 30 per cent gain last year.
Recent data, including last Thursday's factory activity report, confirmed underlying strength in the economy, suggesting the Fed was justified in its move.
But investors will be anxious to see whether that strength is also seen in the December US payrolls report, due on Friday. The Fed has tied its policy in part to jobs data. In its announcement last month, it said it "likely will be appropriate" to keep overnight rates near zero "well past the time" that the US jobless rate falls below 6.5 per cent.
"The expectation is we're going to hear things are good, otherwise why would they have tapered," said Rex Macey, chief investment officer of Wilmington Trust Investment Advisors, based in Wilmington, Delaware.