David Kirkpatrick

July 23, 2009

Dow tops 9000

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 3:22 pm

A first in six months. Are these finally those green shoots we’ve been reading about? I’m not holding my breath, but a lot of indicators seem to be at least a little positive. A definite uptick from either not so negative or neutral that had everyone excited earlier this year.

From the link:

In early afternoon trading, the Dow Jones industrial average was 2 percent, or 179 points, higher, while the broader Standard and Poor’s 500-stock index rose 22 points, or 2.2 percent. The Nasdaq gained 44 points, or 2.3 percent.

“We’ve had an exceptional rally here,” said Peter Cardillo, the chief market economist at Avalon Partners. “In the remainder of the summer we’ll see the S.&P. challenging the 1,000 mark.”

“The housing market does point to signs of stabilizing and that obviously is key to consumer confidence to begin to rebuild,” Mr. Cardillo said. “If we see daylight in the housing market that will give another indication that the economy crawling out of recession in the fourth quarter is achievable.”

Shares were up across all sectors in the S.&P., led by telecommunications, consumer goods and energy. Ford, which is the only Detroit automaker now publicly traded, was up almost 11 percent.

June 4, 2009

Economic indicators not behaving

News stories like this perfectly illustrate why I remain skeptical of any rosy near-term predictions. I honestly think the media is doing the general public a great disservice with the “doom,” “doom,” “doom” and then, “it’s all going to be great!,” followed soon after with, “alas, woe is us.” The news cycles leave people tired, confused and probably distrustful of most things they hear.

The fact is we remain in fairly uncharted territory and even though things are looking a little better in that everything is no longer in a free fall, many things can happen to really crater the global economy. Let’s just say we are not on solid footing by any measure right now. Any report to the contrary is just blowing smoke.

Instead of worrying over all this bipolar news, the best bet is to keep the stiff upper lip, chin up approach and just stay alert to the facts and conditions on the ground.

From the link:

The nation’s service sector shrank in May at the slowest pace since late last year. And factory orders rose in April. But the improvements fell short of economists’ expectations and disappointed investors, who sent stocks lower.

Economic reports earlier this week on home sales and manufacturing had been encouraging, but Wednesday’s figures sent a reminder that the economy remains sluggish.

“People assumed it was safe to go back outdoors, but it’s still raining,” said David Wyss, chief economist at Standard & Poor’s. “It’s just not raining quite as hard.”

The Institute for Supply Management said its services index registered 44 in May, up slightly from 43.7 in April. It was the highest reading since October. Service industries such as retailers, financial services, transportation and health care make up about 70 percent of U.S. economic activity.

But the ISM figure marked its eighth straight monthly decline, and it fell slightly below economists’ expectations. Any reading below 50 indicates the services sector is shrinking. The last time the index was at 50 or higher was in September.

Separately, the government reported that orders to U.S. factories rose 0.7 percent in April, the second increase in three months.

But the Commerce Department’s report fell short of analysts’ expectations. And the government also marked down the March figure to a 1.9 percent drop, from the 0.9 percent decline previously reported.

Wall Street fell after the disappointing figures were released. The Dow Jones industrial average dropped more than 65 points to 8,675.24. Broader averages also declined.

Federal Reserve Chairman Ben Bernanke, meanwhile, said Wednesday that the economy will begin growing later this year, but the improvement will be slight.

“We expect that the recovery will only gradually gain momentum,” he told lawmakers. “Businesses are likely to be cautious about hiring, and the unemployment rate is likely to rise for a time, even after economic growth resumes.”

The current recession, the longest since World War II, began after the bursting of the housing bubble led to a financial crisis last fall. Economists say recoveries after such crises tend to be slower, as credit remains tight even after growth returns.