Market up, but can it stay up?
by Peter Switzer
Good news kept the US stock market ticking over positively with another better than expected jobs number. And the finish was even better despite the fact there was a credit event following the Greek bailout deal.
The Americans have effectively wiped out the Crash of 2008 with the S&P 500 index now up 103 per cent since the lowest day for the stock market — 9 March 2009.
I think on that criteria you would have to say the Yanks have been in a bull market — three years of it! — and so our good market times are out there waiting to happen.
We’re only up 34 per cent and you can partly blame the ruinous Reserve Bank rates policy for that!
On Wall Street
Let’s look at the closing data on Wall Street and the Dow was up 14.08 points to 12,922.02 while the S&P 500 was up 4.96 or 0.36 per cent to 1370.87 and that’s up nine per cent this year and 25 per cent since October!
The credit event happened after not enough of the private creditors were in a forgiving mood for the Greeks and so some payments were necessary on default insurance contracts. However, as this was expected, the market did not go crazy about it.
For the record, 84 per cent of creditors gave in to the Greeks and copped a haircut on their initial investments in Greece’s bonds and most of those would have been the banks that have been thrown a lifeline by the European Central Bank with three-year cheap loans.
The really good news was the US job numbers with 227,000 positions created over February but the unemployment rate remained at 8.3 per cent.
Meanwhile the US consumer is coming back with imports coming in at an all-time high. While imports are seen as a negative because there’s an increased reliance on other countries’ goods and services, it’s also seen as a good indicator of rising demand.
There’s a pretty quiet week ahead for the US, data-wise, with CPI, industrial production, consumer sentiment and the Philly Fed survey the most interesting for the market.
So can we remain in positive territory? I think over the year the answer is yes but we’ll be tested by Europe and other debtor countries. I’m not in a mood for dumping stocks yet.
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Published on: Monday, March 12, 2012
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