US stocks edge up, but concern over rates adjustment persists

U.S. stocks closed on a positive note last Friday, suggesting a pent-up investor appetite for risk. The market will be closely watching the developments of the meeting between President Barack Obama and Fed chairman Janet Yellen. The marketing is expecting more cautious approach to interest rate hikes by the Fed.

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The Dow Jones Industrial Average added 35 points or gained 20% to close the day at 17576.96. The S&P 500 gained 5.69 points or jumped 0.28% to finish at 2047.60. Nasdaq Composite added 2.32 points, equivalent to 0.05% gain to close the day at 4850.69.

Interest rates chatters

The dollar has been seen falling against the Japanese yen and the European common currency Euro as uncertainty grows over U.S. interest rates adjustments. The market was expected more rapid move by the central bank to hike rates but those expectations are fading as Fed appears to be becoming more cautious about raising interest rates. A series of rate hikes were expected in 2016.

As long as the Fed is seen dragging its feet in raising interest rates, investors are interpreting a fragile economy, thus leading to moves that have seen the dollar losing ground against some major global currencies.

White house meeting

President Obama and Yellen are expected to meet today to discuss monetary regulation and economic issues. One of the issues expected to come up in Yellen’s meeting with Obama include stability and ability of the country’s leading lenders to cope with economic stress without requiring to be bailed out by taxpayers.  The other issue expected to be discussed at the White House meeting are matter relating to the rules of executive compensation.

The meeting will be private, although Vice President Joe Biden is expected to attend.

Concern government spending cuts

Obama will be meeting Yellen at a time when bankers are also calling for increased spending by governments. In the U.S. investments and consumptions by the government at all levels in 4Q2015 fell to just 17.6% of the gross domestic product. The issue of boosting government spending is expected to be a priority issue when G20 officials meet.

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