September 3rd, 2012 12:56 EST
Judyth Piazza with Steve Selengut: The Stock Market and the 2012 Election
Judyth Piazza Chats with Steve Selengut about The Stock Market and Economic Report and Simon T. Bailey with the Vuja de Moment on The American Perspective Radio Program.
After a very quiet summer week on Wall Street (half the traders must have been on vacation), markets closed up, consolidating the gains made since the June 4th low. Last week the S&P gained 1.07%, the Dow picked up 0.85%, and the Nasdaq gained 1.78%. Before getting into what transpired last week, let`s take a moment toreflect on how far we`ve come this year. The S&P has been positive eight weeks out of the last ten, has gained 11.79% for the year, and is up 25.44% since this time in 2011. Despite a rocky second quarter and concerns about a double-dip recession, the markets are actually performing well. We know it can be hard to maintain composure when markets hit turbulence,but overall equity performance is getting better.
Federal Reserve Chairman Ben Bernanke started off Monday with reassurances that broad market measures are still pointing towards a recovery. While he didn`t discuss monetary policy, we can be sure he recognizes that the economy isn`t out of thewoods yet and is still prepared to take action if needed. Though the week was light on economic news, jobless claims turned up lower than expected and our trade deficit narrowed, indicating that the economy is doing better, overall. Markets ticked up after his remarks, continuing their quiet rally.
Analysts have been surprised by the stealthy summer rally, as corporate revenues are down and economic fundamentals are still lukewarm. One explanation for why stocks are moving higher despite weak market internals is that traders expect Fed action next month. The downside to this is that if the Fed disappoints, equities could tumble.As we get closer to the end of the year, we can also expect additional media focus on the impending fiscal cliff, the expiration of tax cuts, and deep government spending cutbacks due to kick in January 1st. If the federal government doesn`t develop a plan, it could definitely rein in any market gains for the year.
In short, let`s remain cautious about our summer `sugar high` rally, and understand that there will likely be additional turbulence ahead as election season heats up, the Fed announces its policy plans, and investors turn to our leaders for decisive action.
Tuesday: Producer Price Index, Retail Sales, Business Inventories
Wednesday: Consumer Price Index, Empire State Mfg. Survey, Treasury International Capital, Industrial Production, Housing Market Index, EIA Petroleum Status Report
Thursday: Housing Starts, Jobless Claims, Philadelphia Fed Survey
Friday: Consumer Sentiment
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The Vuja de Moment with Simon T. Bailey is the reverse of the French saying - DÃ©jÃ vu which means "already seen it."
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