Stock market indices give a boost to business confidence
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RSS FeedA significant crossover point has been reached by North America’ s major stock market indices. As of October 2009’ s month-end closing, the four major indices are all higher than they were a year ago. Never mind that the base period comparison is low because stocks plummeted at the end of September last year. The year-over-year increases still give a considerable boost to business confidence. Combine it with the fact that U.S. gross domestic product change was positive (+3.5% quarter to quarter annualized) for the first time in five quarters in the July to September reporting period and the outlook for business prosperity has definitely picked up.
Another positive is that more than three-quarters of earnings reports so far for the latest quarter are exceeding analysts’ expectations. Even Ford Motors has just reported a profit. Layoffs, downsizings and other cost costing measures have been the means to achieve better financial statements, more so than an improvement in market demand. Nevertheless, this lays the foundation for expanding activity levels as general economic recovery gets underway in earnest.
Largest percentage gains year over year
NASDAQ (+18.8%) has realized the largest percentage gain year over year among the four major U.S. and Canadian indices. The Toronto Stock Exchange (+11.8%), thanks to improvement in some commodity prices, has also seen a double-digit increase. What is also notable about the TSE gain is that it does not take into account the 12% jump in value of the Canadian dollar versus the U.S. greenback over the past year. The S&P 500 (+6.9%) and Dow Jones Industrials (+4.2%) have made more modest moves in the right direction.
Degrees of recovery
So where do the indices now stand relative to their recent declines? How much of their drops have they recovered? For all four indices, February 2009 closing levels were the low points in the recession. Since then, the NASDAQ is 45.0% of the way back to its previous cyclical peak of October 2007. The TSE has recovered 42.3% of its loss between May 2008 and February 2009. Dow-Jones Industrials have fought 38.6% of the way back to their previous peak in October 2007 and S&P 500 stocks have clawed back 37.0% of their loss, also versus October 2007.
Performances of key Indices - Oct. 30, 2009
| INDEX | 52-WEEK LOW | 52-WEEK HIGH | YEAR AGO (OCT 31, 2008) |
MONTH AGO (SEP 30, 2009) |
Latest Month-end Closing Prices (OCT 30, 2009) |
||||
| 52-WEEK LOW | 52-WEEK HIGH | YEAR AGO | MONTH AGO | ||||||
| Dow Jones Industrials NYSE (^dji) |
6,440 |
10,158 | 9,325 | 9,712 | 9,713 | 50.8% | -4.4% | 4.2% | 0.0% |
| S & P 500 NYSE (^gspc) |
667 |
1,101 | 969 | 1,057 | 1,036 | 55.3% | -5.9% | 6.9% | -2.0% |
| NASDAQ (^ixic) |
1,266 |
2,191 | 1,721 | 2,122 | 2,045 | 61.5% | -6.7% | 18.8% | -3.6% |
| S & P/TSX Composite TSE (^gsptse) |
7,480 |
11,649 | 9,763 | 11,395 | 10,911 | 45.9% | -6.3% | 11.8% | -4.2% |
Securities Dealers Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters.
Table: Reed Construction Data – CanaData.
Oct. 30, 2009
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The Key Stock Market Indices are:
1) New York Stock Exchange – Dow-Jones Industrials (30);
2) New York Stock Exchange – Standard and Poor’ s (S & P) (500);
3) National Association of Securities Dealers Automated Quotations – NASDAQ Composite Index;
4) Toronto Stock Exchange – S & P/TSX Composite.
Securities Dealers Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters.
Chart: Reed Construction Data – CanaData.
Toronto Stock Exchange
-1.gif)
Dow-Jones Industrials (30)
-2.gif)
Standard and Poors (500)
-3.gif)
(National Association of Securities Dealers Automated Quotations)
-4.gif)
Securities Dealers Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters.Chart: Reed Construction Data – CanaData.
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At least there are improvements that we are experiencing in our economy. However, there are still some aspects that is not recovering and maybe affect our later life like when we retire. Retirement is a big topic, as it’s less advisable these days to put your retirement funds in the stock market or real estate, and that has people wondering about retirement annuities. By and large, you want to stay the heck away from them. Here is how retirement annuities work – you sell an insurance company the bulk of, if not totality of, your assets, and they give you a monthly stipend until you die. Your heirs, upon your expiration, get nothing. Now retirement annuities do guarantee that you’ll see some money, but they don’t mention the huge commission that agents get for it – not to mention whatever’s left over – and your children might need quick payday loans to pay your funeral costs.