The stock market went on a rampage this past week as equities surged northward due to several important events including the mid-term elections, the Fed’s policy announcement, and an improving employment report for the month of October. All the major equity indexes moved higher, partly due to the Republicans winning back control of the U.S.
The stock market had its best October since 2003 due largely in fact to strong earnings reports, a growing economy and an improving report on jobless claims. October had loads of thrills for the bulls with big upside moves, and not many downside chills for the bears could be found. The S&P 500 closed out the past week virtually flat, although its 3.7% jump in the scary month of October was its best October in seven years. In addition, for the month, the Dow rose by 3.1%, 5.9% for the Nasdaq, and a 4% jump for the smaller-cap stocks as represented by the Russell 2000.
Stocks are up with Halloween fast approaching. Investors should certainly be content that the month of October has been nothing short of a financial ‘treat’ thus far. The broad equity indexes were higher for the seventh week out of the past eight, with earnings reports helping drive prices higher. Bulls continue to feel that the economy is beginning to improve and that it is just a matter of time before the worst of the worst of the financial crisis is wrung out of the system.
There certainly was a huge dichotomy when it came to the equity markets this past week, as on the one hand we had outstanding results for some of the big technology names, while on the other hand, we had the stagnation of the big banks thanks to new worries surrounding the mortgage foreclosure proceedings. Strong earnings from Google gave a big boost to the technology sector as the Internet-search giant leap above the $600 mark this past Friday. Google jumped $60.52, or 11%, to $601.45, its highest close since January after the company posted a 32% rise in its third-quarter profit.
Even with the disappointing jobs report this past Friday, the good times just keeps on coming for equity investors, as all the major indexes finished in the black for the first full trading week of October. It was a week where we saw declines in both government jobs and private sector jobs, yet a week where we also witnessed the Dow Jones Industrial Average hurdling past the 1,000 mark for the first time since this past May. Apparently most professional money managers are betting that we’ll be in for another round of quantitative easing, which the government achieves by buying bonds. It’
The temperatures in Alabama weren’t the only thing that was hot during the notoriously scary month of September, as equities posted their best September in nearly 71 years. Much of the strength came during the second half of the month on better-than-expected economic news which beat back worries about a double dip recession.
While it certainly wasn’t as convincing as Alabama’s victory over the Duke football team this past weekend, the stock market ‘bulls’ continued to stampede ahead this past week as all the major indexes finished higher. This bullish train continues to chug down the track in a month that most pundits said would most likely be very tough for stocks to say the least. Boy, have they ever been wrong! Thus far in the month of September, the Standard & Poor’s 500 is already up a very impressive 8% and the Nasdaq Composite is up nearly 10%.
Who said September is the scariest month for the markets? Out of the seven trading days of the month so far, six have been positive. Stocks have moved out of their August doldrums and have moved steadily higher in September thanks to a series of encouraging signals on the strength of the U.S. economy. The latest came this past Friday morning with a report that wholesale inventories shot up in July, a sign of confidence that retail sales will soon begin to pick up.
What a difference a month makes! Stocks snapped back from a dismal August, and over the course of the first three days of September all the major equity indexes picked up solid ground just when the markets were looking at a ‘fourth and long’ situation. (This in honor of the beginning of the collegiate football season.) First, consider the damage done in August, which registered the worst monthly performance in nearly ten years. Investors experienced a 4.7% loss for the Standard & Poor’s 500, while the Dow gave up 4.3%.
The key word for this past week's stock market action could be summed up in just one word: reversal. The whole week came down to just one 90 minute stretch this past Friday – from 7:30 a.m. to 9:00 a.m. Alabama time– during which we got better-than-expected revisions to second quarter GDP, and a much over hyped speech from Fed Chairman Ben Bernanke. Although 'Uncle Ben' really didn't say anything of note, when the prognosticators parsed his carefully chosen words, they found that he is more than willing to open the door to more quantitative easing...