Investors View Market Rally with Cautious Optimism
The Dow Jones industrial average is up 15.5 percent for the past four sessions, while the Standard & Poor’s 500 is up 18 percent. For both of these market indicators this has been their biggest four-day rise since the historic Great Depression. Chief market strategist at RDM Financial Group, Michael Sheldon, remarked that “sentiment has turned slightly more positive over the past few days” in response to the various stimulus packages that have been announced, which may very well turn the tide.
Obama’s remarks appear to have saved the day by calming a market that was being hit with waves of negative economic reports. Government reports revealed that unemployment in the U.S. is at recessionary levels, consumer spending continues to decline, new home sales are at their lowest level in nearly eighteen years and factory orders for big-ticket items recorded its worst dip in two years. Analysts were, however, expecting the news to be bad and this is seen as another factor for the turnaround in stocks. The holiday shopping season accounts for as much as forty percent of annual profits for a great number of retailers, but it is anticipated that this coming holiday season will see a major decrease in sales as consumers battle with rising unemployment and a decrease in disposable income per household.
Sal Arnuk of Themis Trading LLC sees the activity in the market as “light-volume shrugging off of bad news” and views this as being very encouraging in the short term. Analysts agree that the market’s performance in recent sessions indicate a stabilizing of stocks, but are dubious as to how long it will last in view of the many aspects of the U.S. and global economy that need to be addressed.