First let me just say that the psychology of the stock market has definitely changed from being a negative Nancy to a positive outlook on the future. This week was a game changer. All the numbers that were reported pointed toward a better economic outlook. From my post on Thursday I mentioned that jobs, housing, and manufacturing were all positive. This is what it takes to drive a market higher. The stock market is driven by future results and getting investors to buy into a positive future for the United States economy is crucial. This week that happened. Even if it was a glimmer of hope that is all we needed to drive the market higher.
The data that was truly important was the release of the month end August employment report. Although we still continue to lose jobs the number came in less than expected as nonfarm payrolls fell 54,000 compared to consensus of 120,000 according to briefing.com. Another positive was September employment report projections was revised from the loss of 131,000 jobs to 54,000. That is a huge revision! The other big number that is more of a true gauge of the jobs market is the private nonfarm payrolls. Private nonfarm payrolls came in better than expected at 67,000 compared to the consensus of 44,000.
All these numbers point to a positive turn for the future of the U.S. economy. This is just the beginning of the upturn as we have a long way to go before the economy is truly out of the woods for a double dip recession. Double dip reminds me of ice cream. Maybe everyone would turn positive if they thought about ice cream when the word double dip was mentioned about the economy. LOL!
Anyways, here is a recap of the positive buying in the stock market for this week. These are phenomenal numbers for 1 week! This should make you feel more optimistic about investing in the stock market. With the current rate of return in the average savings account (less than 2% in most cases) this type of return would take over 2 years to generate that kind of money. You do the math! 1 week in the stock market over 4% or 2+ years in a savings account to generate the same results. It’s a no brainer! Stocks crush savings accounts! The risk is worth the reward!
Recap
DJIA
Monday close 10,009.73
Friday close 10,447.93
438.20 point move to the upside
4.37% return on the week
S&P 500
Monday close 1,048.92
Friday close 1,104.51
55.59 point move to the upside
5.29% return on the week
NASDAQ
Monday close 2,119.97
Friday close 2,233.75
113.78 point move for the good guys!
5.36% return on the week
In the end investing in stocks long term will always produce better returns than stashing your cash in a savings account.
Since stocks had such a great week I’m looking for a bit of a pullback as this is what normally occurs after a rally in stocks. Pullbacks are part of the game.
Also, after taking a poll on the creation of a personal finance blog I have decided that the interest is there. Be on the lookout for the future as a personal finance blog will be in the making.
Have a great day!
Clay-
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