The markets were well on their way to shatter all kinds of records today.
Towards the end of the market day, however, they shed some of their gains.
Nevertheless, we still had, once again, a good upward movement in the markets—one of those movements that some critics persistently call “meaningless day-to-day fluctuations.”
Let’s see what today’s meaningless market fluctuations resulted in:
U.S. stocks rose across the board as stronger-than-expected profit reports and a drop in the number of people continuing to seek unemployment benefits provided investors with more evidence that the economy could be strengthening.
After rising as much as 176 points during the day, the Dow Jones Industrial Average gained 83.74 points, to close at 9154.46 — the highest close since Nov. 4. The DJIA is up 40% from its 12-year closing low of 6547.05 hit on March 9. Going into the last day of July, tomorrow, the Dow industrials are up 8.4% for the month, the best monthly performance since October 2002, and also on track for its best July since 1989, when it rose 9.04%.
At one time today the DJIA was on pace for the best percentage July gain since 1929.
The Nasdaq Composite Index rose 16.54 points to 1984.30 after briefly crossing 2000 for the first time since October, 2008. It is up 8.1% for July so far and up more than 55 percent from its low of 1,269 in March.
The S&P 500 approached a nine-month high, rising 11.60 points to 986.75 after topping 990 intraday. At one time, it was less than five points from 1000, a psychologically important mark the S&P hasn’t crossed on either an intraday or a closing basis since Nov. 5, 2008. It is up 7.3% so far this month.
About 2,500 stocks rose on the New York Stock Exchange, while only about 500 fell. According to MSNBC.com, “The climb extends a rally that began July 13 when companies started reporting profits that exceeded analysts’ modest expectations…Profit reports this month from some of the nation’s best-known companies have boosted confidence that the longest recession since World War II might end this year.”
According to Bloomberg.com:
All 10 industry groups in the S&P 500 advanced today after the Labor Department’s weekly jobless data bolstered expectations firings are slowing as the economy stabilizes. Applications for jobless benefits rose by 25,000 to 584,000 in the week ended July 25, compared with more than 600,000 claims every week last month. The total number of people collecting unemployment benefits decreased for a third week.
The S&P 500 and Dow average have risen 12 percent since July 10 as companies including Caterpillar Inc. and 3M Co. reported results that topped estimates. The surge left the benchmark index for U.S. equities trading at about 16.7 times its companies’ profits over the past 12 months, the highest level since September, according to Bloomberg data.
And according to the Labor Department, the number of people remaining on the jobless benefit rolls, fell to 6.2 million from 6.25 million, the lowest level since mid-April. Economists polled by Thomson Reuters had expected that figure to rise to 6.3 million.
True, the unemployment rate is at unacceptably high levels. And, true, there are still some negative economic indicators.
I will not use the most recent Newsweek cover article “The Recession is Over!*” to support my perception that we are at the beginning of the end of our recession, but I would encourage readers to look at it, as the article provides examples of progress that has been made because of the stimulus packages, as well as areas where improvement is needed; it offers words of optimism, but also words of caution; and it does a fair job of explaining the Obama administration’s strategy—which the author calls “the smart economy.”
By the way, President Obama also pointed to the Newsweek article and cautioned that tough times are not over.
Steve Forbes, while admitting that our economy is recovering at a 3 to 4 percent real growth rate, claimed that “the pace is not fast enough.”
He is probably right. Americans are an impatient bunch. We want results pronto! No matter how long it took to get us in the present mess.
Tomorrow, the balloon on Newsweek’s cover could burst.
Tomorrow, the markets could crash in one huge “meaningless downward fluctuation.”
But let’s hope that as the markets continue to go through a series of those “meaningless” upward movements and that, as concrete results of the many stimulus packages and efforts become apparent, even the most skeptic will agree that we are finally on our way towards economic recovery—after all, optimism is a critical factor in any economic recovery.
As Daniel Gross, the author of the Newsweek “balloon” story concludes:
Until the next big thing comes along, consumers and businesses will continue to do what they’ve been doing for the last several months: pay down debt, restructure, and focus on survival. Using federal resources as a lever and crutch, we’ll have to take satisfaction in small, incremental gains. It’ll be grueling work—much like repaving roads in Westport, Mass., in the middle of August.*
*Gross is referring to one of the stimulus-funded jobs landed by a small construction firm in Massachusetts. A $4 million job that kept it from having to lay off additional people. The job entails pouring and raking asphalt on Route 6, forcing traffic to crawl along as drivers make their way to the nearby Atlantic beaches.
The author is a retired U.S. Air Force officer and a writer.