Economic Indicators, Stock Market & Investment Reports

10.29.2009

U.S. GDP finally expanded in third quarter

The United States GDP grew in the third quarter ended in September, the first time its economy has expanded in more than a year. The economy expanded at a 3.5% seasonally adjusted annual rate, ending the longest contraction since World War II.

The economy had been falling for four straight quarters, bottoming with a 6.4 percent decline in the first three months of this year, the steepest quarterly fall since 1982. The expansion matched the economy’s average annual growth rate from the last 80 years

The growth was driven by consumer spending, which rose 3.4% in the third quarter. Some of the largest components of growth, for instance, came from spending on car sales and house building, both areas that have been propped up by federal programs.

The recovery is expected to be slow and painful, as companies shed jobs and credit remains tight. Job-seekers probably will not see the benefits of a recovery for months to come.

The stock market surged in reaction to the news, a bigger-than-expected expansion in the U.S. economy. Stocks posted their biggest gain in more than two months Thursday. The Dow finished up 199.89 points, or 2.05%, to 9962.58, its largest one-day point gain since July 15, when it surged 257 points.

The Standard & Poor's 500 rose 2.25% to 1066.11, with gains in all its sectors, led by a 4.3% jump in financials and a 3.2% rise in its materials category.

10.27.2009

Home prices continued to rise

The prices of U.S. homes in 20 metropolitan cities continued to rise for the fourth-straight month in August, according to the Case-Shiller home price index. The home price stabilization added to signs of housing market improvement and economic stability in the United States.

In August the price index climbed by a seasonally adjusted 1% compared with July. Prices rose in 17 of 20 cities.

In the past year, the composite index is down 11.3% in the 20 cities. Prices are down 29.3% from the peak. Prices are where they were in the fall of 2003.

The Case-Shiller index lags behind the National Association of Realtors’ report on existing home sales, which have been issued for September. That number also showed improvement. Low prices and mortgage rates combined with the first-time buyers’ tax credit have spurred home sales. Congress is considering extending the tax credit that saves first-time buyers 10 percent of the sales price, up to $8,000.

Some investors have become concerned that such signs of improvement could prompt central banks to withdraw stimulus measures sooner than expected. Another factor likely to obstruct the market in the coming months is an increase in interest rates, as the Federal Reserve ceases its buying mortgage-backed securities.

10.15.2009

Confidence returned, Dow reclaimed 10,000 mark

U.S. stocks soared higher sparked by earnings news on Wednesday, Oct. 14, pushing the Dow Jones Industrial Average to close above 10,000 for the first time in more than year. The sharp rally signaled investors' confidence that the economy is recovering from the financial crisis and recession.

SmartInMoney reported that the Dow finished up 144.90 points, or 1.5%, to close at 10,015.86, its highest level since global markets plunge on Oct. 6, 2008, when the Dow fell below 10,000 amid the outbreak of financial crisis on Wall Street. The Dow first closed above 10,000 in May 1999 but retreated in the years after the dot-com bubble deflated. It then regained the 10,000 mark in late 2003 before peaking at 14,000 in October 2007.


Other indexes hit fresh one-year highs as well. The broader S&P 500 stock index gained 1.8% to end at 1,092.02, while the Nasdaq Composite rose 1.5% to 2,172.23.

The Dow is still more than 4,000 points off its all-time highs; while S&P 500, a broader measure of the market, are down 30 percent from their peaks.

The sharp rally was fueled by surprisingly better than expected results from two blue chips, Intel and J.P. Morgan Chase and a smaller decline than anticipated in U.S. retail sales.

10.13.2009

Senate committee approved health care bill

The Senate Finance Committee voted on Tuesday to approve legislation that would reshape the American health care system and provide subsidies to help millions of people buy insurance. The vote was 14 to 9, with all of the other Republicans opposed. Senator Olympia J. Snowe, Republican of Maine, joined all 13 Democrats on the panel in support of the landmark bill.

Health care legislation is expected to be on the Senate floor the week after next, said a spokesman for Majority Leader Harry Reid of Nevada. But it won't be the Baucus bill; it will be combination of the Finance version and a more liberal proposal from the health committee.

10.02.2009

A 26-Year High Unemployment Undermines Recovery

The economy shed another 263,000 jobs in September and the unemployment rate rose to a 26-year high of 9.8% with 15.1 million people unemployed. The unemployment rate edged up from 9.7 percent in August, according to the Labor Department, and continued to inch toward double digits, a level last seen in June 1983.

Thought the rate of job loss has tapered off compared to the early months of the year, the persistently weak labor market could undermine a promising economic recovery from the worst U.S. recession since the Great Depression.

The bleak report emphasized the risk that without jobs, consumers won't have income to spend and that will restrain growth and give employers little reason to resume hiring after 21 consecutive months of job losses. Without consumers, the economy can’t experience a really strong recovery.