U.S. Stocks Rally, Sending Dow Average to Record (Bloomberg):
- U.S. stocks rallied, sending the Dow Jones Industrial Average to a record, as investors speculated the worst may be over for banks and construction companies hurt by subprime mortgage losses.
- The Dow’s record caps a six-week recovery from a slump that helped wipe out almost $2 trillion in U.S. market value. The 30- stock gauge added 191.92, or 1.4 percent, to 14,087.55, above its previous closing high of 14,000.41 set on July 19.
- The Standard & Poor’s 500 Index increased 20.29, or 1.3 percent, to 1,547.04, 0.4 percent shy of a record.
- The Nasdaq Composite Index gained 39.49, or 1.5 percent, to 2,740.99, the highest in six years.
Comments
Go back 4 to 6 weeks ago… If you were listening to the media you would have thought we were months or years away from new highs in the stock market. What happened to all of the concerns related to the housing market, the slowdown in consumer spending, and reduced corporate spending? I guess the market just doesn’t care about all the doom and gloom predictions in the financial media. What is the action of the market telling us? When in doubt, follow the trend! In spite of the negative news (dollar reaches new low, housing situation, oil at new highs, etc.) the market keeps climbing.
In his latest newsletter John Mauldin looks at whether it is possible for the US economy to be in a recesion while the US stock market continues to rise. John’s letter points out that the market’s rise this year has been dominated by the more global sectors which consist of the large multi-national businesses. Many of these companies make more than 50% of their earnings outside the US and the global economy is doing well. This provides some insight into why the market continues to rise in the midst of so much negative news.