It appears the consensus opinion is that due to the recent tragedies; Japan’s growth rate will likely fall in the near term, but reconstruction activities should stimulate growth over time. Here in the U.S. this opinion seems to be taking hold and evidence of this can be seen in recent stock market trends. As of the close of the market yesterday, the three major U.S. stock indices (Dow Jones Industrials, S&P 500 and NASDAQ) are all above where they stood just prior to the tragedies that took place in Japan on March 11th of this year.
Along these lines, I saw a presentation on CNBC that illustrated the stock market’s reaction to past nuclear tragedies dating back over 50 years. Surprising, the average decline of the Dow Jones Industrials average one month after such events was down approximately 1.70%. As horrible as some of the events appear, the realty is Wall Street and investors very quickly begin to start looking past what has occurred and ahead.
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St. Patrick’s Day brought some Irish luck to the stock market and a sense of rationality. The unrest in the Middle East actually took a back seat to the tragedies in Japan. Please note, I am not downplaying the horrible events that have occurred in Japan. My point is that it is not the end of world! During this tragedy, this past Wednesday to be exact, I specifically saw the Dow Jones Industrials decline approximately 1% due to some comments regarding Japan’s nuclear reactor crisis from a European diplomat. However, within 15 minutes or so, it was reported that these comments were not only old news, but that the individual who made them was not in the position of authority, and he didn’t have adequate knowledge of the situation to speak intelligently about it. Upon hearing this revised news the market retraced all its losses. Read more
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· Consumer confidence in February was at its highest level in over three years. This explains the International Retail Council of Shopping Centers positive retail sales announcement for last month, and why earlier this week automakers reported double-digit sales gains for February, extending a recovery that started late last year.
· The Labor Department said first-time claims for unemployment benefits fell to 368,000. That’s the lowest level since May 2008. The signs of job growth followed a report Wednesday from payroll processor ADP saying that private employers added far more jobs than analysts had expected last month.
· Indexes of manufacturing output hit their highest levels in seven years in the U.S. and more than ten years in Europe, marking an accelerating expansion that could add to inflationary pressures. Meanwhile, Asian factory output kept growing but at a less rapid pace. China’s manufacturing sector posted its slowest expansion in seven months, easing worries about an overheating factory sector there.
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