The market's volatile movement has been a defining point of the past few weeks, since Fed's Bernanke let it slip that there was a possibility of tapering the QE program "soon". Speculations arose immediately, initially sending markets into a frenzy as bond investors and equities investors alike were rattled as there perception of the markets were questioned. More recently the reassurance from a report from the Wall Street Journal quelled those fears, at least for the immediate future, and the markets reacted with vigor.
US Retail Sales, a monthly measure of sales of goods to consumers at retail outlets, increased by 0.6% vs the anticipated 0.1%, much higher than the previous report of 0.1%. The retail sales report is an important gauge on consumer spending as well as general economic health, although that wasn't the big news that moved the market today.
The S&P 500 had its best day in five months riding high on the coattails of a report from the Wall Street Journal that reassured the markets that the Fed isn't planning on immediately implementing anything different from the norm on its June meeting. Gains of 23.84 (1.5%) were posted in the S&P 500, as a combination of retail sales reports and the reassurance from the WSJ report overrode the fears that were brought on by the troubling signs from the Japanese Nikkei.
The market seems to be fully reliant on word from the central banks for any source of direction as investors globally are frantically trying to rearrange there portfolios to deal with the possibility of tapering for the past few weeks. As previously mentioned, the Fed's current goal for unemployment is 6.5% and until that is reached they have stated that they will leave the short term interest rates as low as they are. Until then, the market will spook at every mention of the word taper and it is wise to proceed with caution.
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