The Dean’s Market Outlook
October 14th, 2009 at 11:42 am Posted by
Over the past two years, the volatility of the Dow Jones Industrial Average has been watched more closely than ever before. Obviously, there has been reason for skepticism about a return in the overall strength of the stock market but today the Dow has surpassed the 10,000 benchmark today for the first time in a year.
This pivotal high point has been long awaited after its 12 year low in March when the Dow was below 7,000 points. Today, the Dow is up more than 50% since its low point and investors are hoping this is a visible sign that the economy is finally moving forward and out of the recession.
The Dean knows that many students in the CollegeStock Community are shorter term, small cap investors but the positive condition of the Dow could boost overall investor confidence and have many more investors rushing to get in on these types of market conditions.
The Dean believes that there are a number of opportunities being realized in the stock market and expects to see more upward movement in the 4th quarter.
A report from Bloomberg this afternoon estimates that Americans are holding onto $3.45 trillion in cash that could return to the market and help “fuel further stock gains.” To put that figure into perspective, that’s 75% of the S&P 500‘s net assets.
Gold has continued to climb, hitting a historic high of $1,072 and oil has moved over $75 a barrel for the first time since last fall. While oil prices increasing typically points to confidence in consumer demand, historically high prices for gold could mean more weakness for the dollar.
Sources from CNBC’s corner report that only $14.5 billion has been invested in mutual funds this year, compared to $254.5 billion put into the safer bond market.
In addition, The Wall Street Journal reports that a 2.7% increase in sales was adjusted to 2.2% for the month of August. The decrease was actually 1.5% which is still lower than the 2.1% forecast. The Dean feels this was expected because the second quarther had an additional $3 billion pumped into the economy through the Cash for Clunkers program.
Like many, The Dean is optimistic about the return of strength in the American economy because he knows that Wall Street will always be there and it certainly has never left.
