March 29, 2024

Mixed Batch of Data Leaves Markets Subdued

Financial markets were subdued Thursday despite encouraging growth figures out of Japan, as investors digested a mixed batch of United States economic data a day after Wall Street indexes hit record highs.

In afternoon trading, the Standard Poor’s 500-stock index was 0.1 percent lower while the Dow Jones industrial average was unchanged. The Nasdaq composite was 0.2 percent higher.

One of the reasons stocks have been buoyant for most of this year has been optimism over the American economy. But a 32,000 rise in weekly jobless claims to 360,000 and a fairly downbeat manufacturing survey from the Federal Reserve Bank of Philadelphia raised questions about the underlying health of the world’s largest economy.

However, the impact on the markets was muted given that a 0.4 percent fall in monthly Consumer Price Index, which took the annual rate down to a two-and-a-half-year low of 1.1 percent, suggested that the Federal Reserve won’t be in a rush to end its super-easy monetary policy soon. The Fed’s monetary injections over the past few years have lain behind the recovery in stock markets since 2009.

“Optimism abounds, and with inflation concerns starting to ignite concern for more rather than less bond buying ahead, it does not seem rational to sell stocks on the view that the economy may be slowing,” said Andrew Wilkinson, chief economic strategist at Miller Tabak Company.

In Europe, Germany’s DAX ended the day 0.1 percent higher while the CAC-40 in France fell 0.1 percent. The FTSE 100 of leading British shares closed 0.1 percent lower.

Japan was in focus earlier after figures fueled hopes of an economic turnaround in the country. A day after the latest set of data showed that the euro zone — the 17 European Union countries that use the euro — was in its longest recession since the currency was launched in 1999, Japanese data impressed on the upside.

Stronger consumer spending and public works investment coupled with aggressive monetary easing gave some oomph to the recovery. Japan’s economy grew by a stronger-than-expected 3.5 percent in annual terms and by 0.9 percent on a quarterly basis, according to figures reported by the Cabinet Office on Thursday.

The forecast-busting data provides the first tangible evidence that the economic policy of the new government of Prime Minister Shinzo Abe is working.

Mr. Abe promised aggressive steps to restart the country’s postwar boom, which effectively ground to a halt in the early 1990s. As part of that effort, the Bank of Japan plans to double the amount of cash circulating in the Japanese economy and held as bank reserves.

One of the offshoots of the policies has been a dramatic fall in the value of the yen, and that’s bolstered the export prospects of the country’s businesses, lifting the Nikkei 40 percent this year.

The Nikkei didn’t extend those gains Thursday, losing 0.4 percent to close at 15,037.24 as investors used the release as an opportunity to book some gains.

“If you’re looking for a clear example of the markets currently moving in a way that is unrelated to the quality of the data, then look no further than the movement in the Nikkei,” said Craig Erlam, market analyst at Alpari.

Despite the modest retreat in Tokyo, most other Asian markets advanced. Hong Kong’s Hang Seng rose 0.2 percent while South Korea’s Kospi added 0.8 percent. China’s main index in Shanghai ended 1.2 percent higher.

Currencies were fairly flat-footed, with the euro up 0.3 percent at $1.2912 and the dollar 0.1 percent lower at 102.07 yen.

Oil prices eked out some gains, with the benchmark New York rate up 48 cents to $94.78 per barrel.

Article source: http://www.nytimes.com/2013/05/17/business/daily-stock-market-activity.html?partner=rss&emc=rss

As Worries Ebb, Small Investors Propel the Markets

Millions of people all but abandoned the market after the 2008 financial crisis, but now individual investors are pouring more money than they have in years into stock mutual funds. The flood, prompted by fading economic threats and better news on housing and jobs, has helped propel the broad market to within striking distance of its highest nominal level ever.

“You’ve got a real sea change in investor outlook,” said Andrew Wilkinson, the chief economic strategist at Miller Tabak Associates.

While the rising market may lift the nation’s collective spirits, it will not necessarily restore everyone’s portfolios. In good times and bad, many individual investors tend to buy and sell at precisely the wrong moments. They dump stocks after the market falls and buy stocks after the market rises, the opposite of what investors aim to do.

Some market experts worry that might be happening this time, too. People who got out as stocks plummeted in 2008 and early 2009 have already missed a remarkable rally. The Standard Poor’s 500-stock index has soared 120 percent since March 2009, passing the 1,500 milestone. This year alone, the main indexes are up 5 percent. Now, the investing public seems more afraid of missing out than of misreading Wall Street again.

Americans’ latest stock-market romance is young, and it could easily fade before it becomes something more serious. Some market watchers warn that given the big run-up in prices, the market is already ripe for at least a brief correction.

Still, the optimism that has pervaded the market in recent weeks is a drastic change from recent years. Until recently, many investors had continued to shy away from stocks in the face of a trio of hovering problems — the potential breakdown of the euro zone, fears of a stalling Chinese economy and political brinkmanship in Washington that threatened to drive the economy into a new recession.

One after another, these threats appear to have dissipated. This week Congress found at least a short-term way around the nation’s debt ceiling, sidestepping Republican threats to let the government default when it reached a self-imposed borrowing limit in February or March.

As the fog of crisis has cleared, investors have more clearly focused on the cascade of good economic data pointing to a growing housing market, shrinking unemployment and corporate earnings that were stronger than expected.

“The last few weeks represent the belief that there will be no existential threat to any large global economy in 2013,” said Nicholas Colas, the chief market strategist at BNY ConvergEx group.

Jim Cole, a 52-year-old employee at the Bank of the West in San Francisco, had most of the money in his individual retirement account in cash at the end of 2012 as he awaited a bad outcome to the fiscal negotiations in Washington. Since Congress reached its agreement, he has put almost all of that money to work in stocks.

“I just bought some more stock this morning,” Mr. Cole said Friday. “There doesn’t seem to be this swirl of impending doom hanging over the U.S. economy or the world economy looking out six to 12 months from now.”

The optimism about the economy and corporate profits has helped fuel eight straight positive days for the S. P. 500, the longest such run since 2004. The S. P. 500 finished Friday up 8.14 points, or 0.5 percent, to 1,502.96.

The Dow Jones industrial average rose 70.65 points, or 0.5 percent, to 13,895.98, near its high. The technology-heavy Nasdaq composite index climbed 19.33 points, or 0.6 percent, to 3,149.71, still well below its peak in 2000.

There is no surefire data to use to gauge the behavior of retail investors. Some of those who left stock-focused mutual funds in recent years have put the money instead into specific stocks or exchange-traded funds, which hold baskets of stocks. But analysts agree that most indicators point to rising confidence in the market.

The level of bullishness among small investors has nearly doubled just since mid-November, according to a weekly survey conducted by the American Association of Individual Investors.

In the last three weeks, the market data company Lipper reported that $14.9 billion had gone into all stock-focused mutual funds, the most in any three-week period since 2001. Mutual funds focused specifically on American stocks have collected $6.8 billion since the new year, the most in all but one comparable period since the financial crisis.

Floyd Norris contributed reporting.

Article source: http://www.nytimes.com/2013/01/26/business/daily-stock-market-activity.html?partner=rss&emc=rss