Positive reaction on Wall Street
by Peter Switzer
I don’t want to give false hope but we’re seeing Wall Street react positively to better European news and what I predicted – a run of better-than-expected US economic news.
Overnight, the Dow was up 131.24 points, or 1.21 per cent, to 10,939.95. Meanwhile, the S&P 500 rose 20.08 points, or 1.79 per cent, to 1144.03.
Indicating investors are a little more relaxed, the VIX or fear index dropped from 40 to below 38. However, not until it’s in the low 20s or even lower will we be in a good space for shares.
European shares had a good night, especially the banks, following EU finance ministers agreeing to shore up the capital of their banks. This has been overdue, but it’s what investors want to hear.
On US economic news, jobs in a private sector report came in miles better than expected – up 91,000 in September, compared to an expected 75,000. That said, planned layoffs jumped to 115,730 in the month and that’s the worst in more than two years!
But on the plus side, the Institute for Supply Management’s services index registered 53, showing that this important growth sector, particularly for jobs, is still growing. Any number under 50 is a sign of contraction.
Frankly, we are a long way from being out of the financial chaos woods, but we are on the right track. We might have to wait until 13 November for an important EU meeting on the bailout program but at least the Europeans are starting to get real and are showing some overdue leadership.
The next market test will be US jobs numbers on Friday.
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Published on: Thursday, October 06, 2011
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