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Rip-roaring Wall Street

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by Peter Switzer

As if willed by a desperate optimist like yours truly, Wall Street has turned on a dime and headed up. And it was good economic news that helped the market move higher.

The 2.76 per cent jump in the Dow Jones — that’s 273 big points — and the two per cent plus rises in the S&P 500 and Nasdaq indexes were great signs that the bears are not in control. This good day for shares should help build a base, which should see the current correction turn into a rally, though there still could be a few tests before it’s all sunshine and blue sky.

Last night on my program on Sky News Business Channel, Shane Oliver — chief economist at AMP — and UBS fund manager George Boubouras both told me that they thought we were in a foundations building stage for the next move up. Let’s hope they’re right.

The good news

To put a spotlight on the good news:

Oil prices went over US$75 a barrel with the International Energy Agency seeing higher demand and the supply implications of the Gulf leak disaster working to raise oil prices.
The foreclosure rate in the US kept dropping in May.
The European Central Bank and the Bank of England left interest rates unchanged.
There was strong demand for Spanish bonds which helped the euro and says something about the negative speculation against European debtor nations.
The euro has had three days of rises and I believe currency is often the canary in the coal mine, so this could be a good sign.
The better-than-expected export news from China has also buoyed the market on the basis that even with its most important customer — Europe — in the doldrums, China has shot the lights out on its export showing. They were up 50 per cent on a year ago, which is not a bad effort.

What’s ahead?

Tomorrow morning we will see how American retail sales, consumer sentiment and business inventories have been faring. More solid news on the US economic recovery could set us up for a big Tuesday. Keep your fingers crossed and have a great weekend.

For advice you can trust, contact Switzer Financial Services.

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Published on: Friday, June 11, 2010