I am currently traveling on the west coast conducting a portion of my annual Marine Corps Reserve training and was unable to post this past Monday, but given yesterday’s events, I had to get a quick blog out. The Dow Jones Industrial Average (DJIA) finally finished the day at a record, closing at 14,254, decisively passing through the October 2007 closing high of 14,164.
The reality is that 14,164 is just a psychological threshold, but it is getting plenty of attention in the media. The market opened up sharply Tuesday morning, even before the news that the ISM Non-Manufacturing (Services) Index unexpectedly increased from 55.2 in January to 56.0 in February. Bloomberg called for a reading of 55.0. Remember, a reading of 50.0 marks the line between expansion and contraction.
The news is awash in opinions about the market now reaching a point of wanting to sell off. I’m convinced that a lot of people want the market to sell off so they can play the “I told ya so” game on TV. But it just seems that absent any really bad news, the market just seems to want to keep going higher. Sounds like an unsophisticated analysis, but there is no denying the bullish tilt to the market that has been in place since the November time frame.
Here are some things to keep in mind:
- We have slow but steady economic growth.
- Profits are topping an albeit low hurdle.
- Credit markets in Europe are quieter.
- The Fed policy is very accommodative.
- There is renewed interest in mergers and buyouts.
- There is a growing sense that China’s economy won’t stall.
- Many are predicting that Europe is expected to exit its recession later in the year.
I’ll sign off with a chart of the Non-Manufacturing ISM Index that I think is interesting.
Please call the office with questions, although I’ll be out until next Monday without much access to my email.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values. The 2, 10 and 30 year Treasury is simply the yield at the close of the day.
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