Is this the begining of a real turn around?
http://online.wsj.com/article/BT-CO-20091029-718416.html?mod=rss_Global_Stocks
QuoteOCTOBER 29, 2009, 2:37 P.M. ET
US Stocks Rally Continues; Financials, Materials Strong
By Geoffrey Rogow and Donna Kardos Yesalavich
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones) -- U.S. stocks continued to trade sharply higher Thursday as a bigger-than-expected expansion for the U.S. economy in the third quarter sparked buying in a wave of riskier assets.
The Dow Jones Industrial Average recently gained 161 points, or 1.6%, to 9923. The Dow, which has posted three triple-digit losses in four sessions, has traded up 100 points or more for much of the session.
Gains for the blue-chip index were led by Alcoa, Caterpillar and Procter & Gamble. Alcoa surged 8.6% and Caterpillar gained 4.3%, wiping out their Wednesday drops. P&G climbed 4.2% as its fiscal first-quarter earnings exceeded its forecasts and the consumer-products giant boosted its sales forecast for the year.
Financials were also strong, including American Express, up 4.4%. The move for financials comes after that sector and others perceived as risky faced steady pressure in the last four sessions. Other areas hit hard in recent days included small stocks, emerging-market funds and commodities prices, while buying in the dollar and Treasurys picked up. That trend reversed on Thursday as the government's first estimate on third-quarter gross domestic product rose at a seasonally adjusted 3.5% annual rate in July through September. The growth was driven by consumer spending, which rose 3.4% in the third quarter.
Traders said the GDP figure eased some of the economic fears that had driven investors out of riskier assets. The small-stock Russell 2000 index recently gained 2.2%, while crude oil increased $2.72 to $80.18 a barrel.
Another sign of the renewed risk tolerance was damped demand for a mid-afternoon seven-year note auction. Bond prices hit session lows following the auction, in which demand was lower than in the $44 billion two-year note auction and $41 billion five-year note sales earlier this week.
The S&P 500, which had declined for four straight sessions, rose 1.8% to 1062, led by its materials and financial sectors, which gained 3% each. The Nasdaq Composite Index, which was also hard-hit earlier this week as investors shied from riskier investments, rose 1.6%.
Stocks' broad slump earlier this week came as investors focused on disappointing data on housing, durable goods and consumer sentiment. These worries sent the CBOE Market Volatility Index, or VIX, surging this week, but it dropped 10% in recent Wednesday trading.
While stocks gained and volatility declined, there remained some in the market not ready to shrug off the early week reports just yet.
"We've been on the cautious side as the market is still ahead of the economy," said Bill Quinn, chief executive of American Beacon Advisors. "Until you see unemployment subside, there are still concerns about the economy and the consumer."
On the employment front, weekly jobless claims were a bit disappointing Thursday declining by a smaller-than-expected amount.
After moving higher against the euro for much of the week, the dollar recently fell against the euro and rose against the yen.
*deep breath*
OBAAAMA!
Quote from: jimmy olsen on October 29, 2009, 09:45:58 PM
Is this the begining of a real turn around?
I doubt it.
Quote2.36 percentage points of the 3.5 percent third-quarter growth in GDP came from consumer spending. Car sales alone represented 1 percentage point of total growth, reflecting the success of the government's Cash for Clunkers program.
You can only buy so many cars.
Hans said this wouldn't happen so It didn't.
Quote from: ulmont on October 29, 2009, 10:22:50 PM
You can only buy so many cars.
It's the scrap program, where they give you some money if you recycle your old car and buy a new one, combined with the very low prices for the new ones.
This is temporary.
The rest, I really can't say.
Bush's economic plan finally paying off
Quote from: DisturbedPervert on October 29, 2009, 10:45:50 PM
Bush's economic plan finally paying off
:rolleyes: :rolleyes:
Semi-related, I opened my wife's 401k statement today & saw that the rate of return for last quarter was over 19%. Looks like my re-shuffling of most of her stuff towards that International Securities Fund did the trick.
Showed it to her when she got home & she asked if that was good or bad :lol:
It's good news but not as good as "US GDP grows 3.5%", since the 3.5% is the annualised rate, ie the first estimate is that GDP rose by something between 0.8 and 0.9% in the 3rd quarter.
Quote from: derspiess on October 29, 2009, 10:55:48 PM
Semi-related, I opened my wife's 401k statement today & saw that the rate of return for last quarter was over 19%. Looks like my re-shuffling of most of her stuff towards that International Securities Fund did the trick.
Showed it to her when she got home & she asked if that was good or bad :lol:
Being from Argentina, she may have seen times when 19% was bad with the inflation. ;)
Quote from: alfred russel on October 30, 2009, 09:25:01 AM
Being from Argentina, she may have seen times when 19% was bad with the inflation. ;)
:lol: Yeah, but I don't think she's ever bothered looking at anything related to investing. Unless it's "investing" in a new pair of shoes or a kitchen appliance that is out of our price range...
Mission accomplished!
Is there anything in here that's not related to government spending? I wonder if this is all just that big deficit we just took on making its way through the economy.
When the economy starts growing on it's own, Tim can start his cheerleading again.
Quote from: derspiess on October 29, 2009, 10:55:48 PM
Semi-related, I opened my wife's 401k statement today & saw that the rate of return for last quarter was over 19%. Looks like my re-shuffling of most of her stuff towards that International Securities Fund did the trick.
Showed it to her when she got home & she asked if that was good or bad :lol:
LOL, pretty much every kind of mutual fund had big gains in the last quarter.
Quote from: DGuller on October 30, 2009, 12:53:54 PM
LOL, pretty much every kind of mutual fund had big gains in the last quarter.
So is that pretty typical then? I haven't looked at my own account yet (got out of the habit of looking at it very often, for sanity's sake) but 19% in just one quarter was far better than what I expected.
Quote from: derspiess on October 30, 2009, 01:09:51 PM
Quote from: DGuller on October 30, 2009, 12:53:54 PM
LOL, pretty much every kind of mutual fund had big gains in the last quarter.
So is that pretty typical then? I haven't looked at my own account yet (got out of the habit of looking at it very often, for sanity's sake) but 19% in just one quarter was far better than what I expected.
I put all my 401k money into a target retirement fund. My target retirement fund returned 16.5% for third quarter.
Hmm. I had tons of growth in the 2nd quarter, not so much in the 3rd.
Quote from: jimmy olsen on October 29, 2009, 09:45:58 PM
Is this the begining of a real turn around?
The jobs won't come back, so no.
This is called a dead cat bounce.
Quote from: Hansmeister on October 30, 2009, 06:05:11 PM
This is called a dead cat bounce.
That is definitely one of my favourite phrases. :lol:
QuoteFlat incomes, weak consumer spending raise concern
Consumer spending tumbles while incomes stagnate, reinforce concerns about economic recovery
By Martin Crutsinger, AP Economics Writer
On 4:42 pm EDT, Friday October 30, 2009
WASHINGTON (AP) -- Flat incomes suggest more weakness ahead in consumer spending, reinforcing concerns about a ho-hum holiday shopping season and a sluggish economic recovery.
"This recovery is going to be very weak. Consumers are in no position or mood to spend. Their wages are down and they can't get credit," said Sung Won Sohn, an economics professor at California State University's Smith School of Business.
Concerns about the economy sparked by disappointing government data on spending and incomes sent stocks down Friday, erasing the previous day's big gains. The Dow Jones industrial average lost about 250 points, and broader indexes also fell.
The Commerce Department reported that personal incomes were stagnant in September while the all-important wage and salary category dropped 0.2 percent, as unemployment rose.
Consumer spending -- which accounts for 70 percent of total economic activity -- dropped 0.5 percent, the first decline in five months and the biggest since December.
The spending retreat reflected a sharp falloff in auto sales following a spike in August from the government's Cash for Clunkers program.
The overall economy, as measured by the gross domestic product, actually grew at a 3.5 percent rate from July through September, signaling an end to the longest recession since the 1930s.
But analysts said the income and spending report underscored fears about a weak recovery. The most pessimistic worry the nation could be headed for a double-dip recession as consumers, concerned about further job losses and their tattered investment holdings, refrain from spending.
Some analysts believe that GDP growth, which received a big boost from the government's stimulus programs in the third quarter, will slow to 2 percent or less in the current quarter.
David Wyss, chief economist at Standard & Poor's in New York, said a recent spike in energy prices and other problems will depress sales in coming weeks, giving the nation's retailers another lackluster shopping season.
Gasoline prices have risen for 17 straight days to a new high for this year of $2.695 per gallon, according to auto club AAA. The increase will add about $50 a month to the typical customer's gas bill, meaning less to spend at stores during the holidays.
Sliding incomes and rising energy costs further darken the outlook for consumer spending during the holidays. People who do spend will stick to discounters like Wal-Mart Stores Inc. and Target Corp., and continue shying away from big-name department stores like Macy's, said John Lonski, chief economist of Moody's Capital Markets Group. Price will be key again this year.
"It most definitely limits the upside for consumer spending and scares the wits out of retailers," Lonski said, adding that consumers are "going to spend as though the economy is still in a recession."
"If you don't make it, you can't spend it, especially with the access to credit much reduced," he said.
A second report Friday showed that wages and benefits including health care rose just 1.5 percent for the 12 months ending in September. That's the smallest increase for the Labor Department's Employment Cost Index on records that date to 1982.
The Obama administration also released a new report that said about 650,000 jobs had been saved or created under the government's $787 billion economic stimulus program. Congress is currently debating expanding certain elements of that program including unemployment benefits and the first-time homebuyers tax credit. Many private economists said the new income and spending report showed the need to do that.
Unemployment, currently at a 26-year high of 9.8 percent, will edge up to 9.9 percent when the government releases the October jobless report next week and will peak at 10.5 percent in the middle of next year, Wyss said.
Last month's spending drop resulted in a boost in the savings rate to 3.3 percent of after-tax incomes, from 2.8 percent in August. Many analysts believe households will keep striving to increase savings and replenish nest eggs that were crushed by last year's stock market crash. That also would hold back spending in the months ahead, weakening the recovery.
But inflation remains in check. An inflation gauge tied to consumer spending edged up just 0.1 percent in September, after a 0.3 percent August rise. Excluding food and energy, the gauge rose 1.3 percent over the past year, well within the Federal Reserve's comfort zone.
Fed officials meet next week and economists believe they will again keep a key interest rate at a record low.
Me after yesterday's GDP data: :beer:
Me after today's economic news: :(
Me now: :mellow:
I don't think it's normal to expect *everything* to turn around immediately once we start to pull out of a recession, is it? Don't job numbers tend to improve later on, and then after that, consumer spending?
Quote from: derspiess on October 30, 2009, 11:15:32 PMDon't job numbers tend to improve later on, and then after that, consumer spending?
Meh, once jobs disappear and companies figure out they can exist without them, they don't really come back.
Quote from: CountDeMoney on October 30, 2009, 11:25:58 PM
Quote from: derspiess on October 30, 2009, 11:15:32 PMDon't job numbers tend to improve later on, and then after that, consumer spending?
Meh, once jobs disappear and companies figure out they can exist without them, they don't really come back.
:greedy: