Federal Reserve Chairman Ben Bernanke today called on Congress and the President to take the lead in boosting the economy.
The chairman’s much anticipated message to Washington was clear: set aside short-term political interests and do something helpful for a change.
In a fit of optimisim, investors responded favorably. The Dow, Nasdaq and S&P 500 were all up in afternoon trading.
The $4 trillion question is whether the pols will take Ben’s message to heart. Given the current tone of the presidential primary campaign, that seems unlikely. I hope I’m wrong and the pols can agree on a plan to light a fire under the economy.
Photo: Federal Reserve chairman Paul Bernanke, right, and Jean-Claude Trichet, of France, president of the European Central Bank, take a morning stroll on the veranda of the Jackson Lake Lodge, before the morning session of the Economic Policy Symposium at Jackson Hole in Moran, Wyo., Friday, Aug. 26, 2011. (AP Photo/Reed Saxon)
The Dow tumbled nearly 300 points Wednesday. Jobs numbers are disappointing. The dollar is weak. If you believe some of the talking heads on TV, the next great financial crisis is just around the corner.
But will this really be the summer of doom?
How long will the rally last and how high will the Dow go? Those are questions every investor is trying to figure out.
Financial entrepreneur, blogger, writer and general contrarian James Altucher predicts the Dow will hit 20,000 and S&P will top 2,000 before the stock market turns bearish.
But as he usually does, Altucher’s advice takes a strange turn.
The Dow has lost more than 1,300 points in the last few weeks, plunging below 10,000 today as investors respond to Europe’s continuing economic troubles and other global headlines.
And, yet, U.S. consumers are blissfully happy.
The Conference Board said on Tuesday the Consumer Confidence Index rose to 63.3 from a revised 57.7 in April. The index measure how consumers feel about current economic conditions and how they view the next six months.
There seems to be a disconnect here. Why, I wondered, are consumers so happy while investors are running in fear? I called University of Tennessee economist Bill Fox for an explanation.
Fox said …
The U.S. gross domestic product grew at a rate of 3.2 percent in the first quarter and consumer spending increased by 3.6 percent, the government reported today.
Normally, these kind of numbers would be cause for celebration, but investors weren’t impressed, pushing the Dow down more than 100 points in late afternoon trading.
Some analysts were expecting slightly higher growth in the GDP and some experts noted that 1Q growth was down from 5.6 percent in the fourth quarter.
That didn’t last long.
The Dow is lower in early trading Tuesday, after edging above 11,000 for the first time in 18 months on Monday. Experts blame the dip on Alcoa Inc. kicking off earnings season by coming up short of analysts’ expectations.
Maybe it’s just me, but it seems corporate earnings are always lower or higher than analysts’ expectations. When’s the last time you saw the headline: “Analysts’ expectations exactly on target”.
The Dow closes in on 11,000 at midday and interest rates on 10-year treasury notes hit 4 percent for the first time since late 2008.
Apparently this is a good news kind of day. Pretty strange for a Monday.
Check out Barron’s take on today’s market.
Have you checked your 401(k) lately? If not, take a look. It’s not nearly as painful as it used to be.
Despite the slow pace of recovery and the mindless yammering that passes for political discourse, the Dow has gained more than 4,000 points in a little more than a year.
Investors are getting back in the game. But will they continue to play?