Stocks jump as the news improves on manufacturing

Source: Associated Press

NEW YORK – Stocks resumed a September rally Friday following a sharp jump in orders for manufactured goods last month and better news about the European economy.
The Dow Jones industrial average rose more than 175 points in midday trading and is heading for a fourth week of gains. That would be the longest winning streak since stocks rose to their highest levels of the year in late April.
A surprise jump in business confidence in Germany also tempered worries about Europe's economy, driving stocks higher in Europe and the U.S. Stocks had fallen Thursday following a report that business activity slowed in the 16 countries that used the euro.
Gold prices climbed again, briefly touching $1,300 an ounce, as many investors remained cautious. The dollar fell.

Read more: http://news.yahoo.com/s/ap/20100924/ap_on_bi_st_ma_re/us_wall_street;_ylt=AqkB1YB7y0umauXuU53uIYys0NUE;_ylu=X3oDMTFmMjVzYzAyBHBvcwMxMDEEc2VjA2FjY29yZGlvbl9idXNpbmVzcwRzbGsDc3RvY2tzanVtcGFz

http://www.calculatedriskblog.com/2010/09/durable-goods-orders-decreased-13-in.html

From the Census Bureau:

New orders for manufactured durable goods in August decreased $2.5 billion or 1.3 percent to $191.2 billion, the U.S. Census Bureau announced today. Down three of the last four months, this decrease followed a 0.7 percent July increase. Excluding transportation, new orders increased 2.0 percent. Excluding defense, new orders decreased 1.2 percent.
...
Shipments of manufactured durable goods in August, down following two consecutive monthly increases, decreased $3.1 billion or 1.5 percent to $197.9 billion.

This was below the consensus for a decline of 1.0%.

“This is reassuring news,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. “Capital goods spending still seems to be on a very solid underlying trend.”

http://www.bloomberg.com/news/2010-09-24/demand-for-u-s-capital-goods-rebounds-as-spending-by-businesses-holds-up.html

that stockholder's wealth is up the same. All over the Country, American's retirement funds are also
up by that , or possibly somewhat lower, than the same. A week or two of this and you will see
Americans passing some of those gains into purchases. Those purchases will stimulate and the fires
continue to heat up.

If those whose interests are to keep the economy from improving would shut the hell up,or be shut up, we might could get something going, starting from today. Huge amounts of investment monies are out there waiting for the time to invest.

Lots of people want a 2nd recession, double dip, depression, what ever you want to call it. That way they can say "I told you so! Neener, neener, neener!

You wrote:A week or two of this and you will see Americans passing some of those gains into purchases.

To make these purchases using the increased value of their stocks, they'll either have to sell stocks, or make these purchases (q: presumably financed by the increased stock values?)

If they sell stocks, won't that selling tend to depress prices?

Alternately, if their purchases are to be financed, isn't credit for consumption what got people into trouble in the first place? And is that what people should do with any current gains right now?

Finally, where are the products and services being purchased coming from? It makes a lot of difference in terms of the efficacy of consumption as a national economic pillar.

You also wrote:

If those whose interests are to keep the economy from improving would shut the hell up,or be shut up, ...

What did you mean by the phrase "or be shut up" in that sentence? Just wondering.

First, I am in no way an expert on economics. I have voiced my opinions based on my observations of
the economic processes, as presented in the media.

My basic thought is that there is a lot of cash sitting on the sidelines waiting to see if the market is going to begin a general rise. Once that cash begins to flow into the equities market, the stock prices will rise due to demand. Then as the value of the investor holdings increases, investors
will be more likely to spend some of their profits. That begins a cycle of consumption that should stimulate the economy in general. Selling some their stocks will not depress prices as long as new
money continues to enter the market. I don't think consumers should borrow money using stocks as collateral. That is a recipe for failure.

As to which products would be purchased, I would assume that with millions of spenders, the purchases would be widely spread over the spectrum of products available.

Next, I am making some assumptions about who is encouraging or discouraging investments based on human nature and the possibilities for manipulation via media propaganda.

We know with certainty that the Republicans and those who support them are doing everything possible to disallow the Obama Administration and the Democrats any form of success, especially as it relates to the economy. If the stock market begin a huge rally right now that continued up into the November elections, the Republicans would be "dead ducks" and they know it. I believe that Republican supporters who are leading businesses are purposely withholding their business expenditures until after the election. And, to the extent that these same people have influence in the media, they are going to present gloom and doom comments about the economy, including the dangers of investing in the stock market. Fox, in particular does this 24 X 7. But, they aren't the only ones.

It's easier to influence the market to drop than to encourage it to rise. But, either way is possible. Note that almost every morning, usually before the mkt opens, there are reports on how the economy has been doing. These reports have a stunning amount of influence on the price performance of the ensuing day. Just a drop of a tenth of a percent lower that what was expected can cause a cascading drop in prices. Whereas a tenth of a percent over the estimate will not be nearly as dramatic especially when the announcers get through minimizing the positiveness of the report.

In light of the major influence the reports have, it is obvious that those who created the reports and/or have privy to their contents prior to release are in a very advantageous position to profit
personally. There will be numerous people among those with prior knowledge. Are their Federal controls in place that would stop people from using this insider information? I'm not talking about
a simple law that makes it illegal, I'm talking about processes that strictly stop it from happening.

My post mentioned possibly "shutting up" those who are trying to depress the market via media propaganda. That could only be done if it could be shown in court, that their is a premeditated
plan by the propagandist to influence the market for the purpose of either financial or political gain which is against existing laws.

this could be the real start of a long and solid recovery...I think the desire for gain will overcome any caution if this continues for another few weeks...before the election, too...

mark

Subject needs more thinking.

"The stock market is idiotic... A few days ago it jumped because someone put out a press release claiming that, technically, the recession ended some time back. Absolutely nothing had materially changed to justify a jump, but up it went. I get a feeling that, once again, small investors are being invited in for another fleecing."

The stock market is idiotic in the short-term. Long term... not so much.

That said, prices today are still relatively high, IMO. The S&P is around 1150 today. It will go significantly higher from here, I expect, but I also don't expect that this is a floor, or close to it. The time to buy was when the S&P was around 700-750, about 1 1/2 years ago. That was a genuine buying opportunity, IMO, so I significantly increased my stock allocation then. Of course, at the time, most here were saying the opposite.

It seems that no matter what the circumstances, sentiment on DU is always bearish, probably because the focus always seems to be on these short-term gyrations in the market. Yet these short-term fluctuations should be irrelevant, because money needed in the short-term should never be invested in the stock market.

Your points are all well noted. I have a balanced portfolio, so things haven't been too bad for me. But if I was allocating new money right now, I think I'd probably go relatively lighter on equities.

I take a different look at it. In the short term, the stock market moves randomly. If it goes up, the pundits will look for any good news that happened the same day as a reason, even if it doesn't make any sense. Vice versa if it goes down.

The idiocy is the allocation of moves to causes, not rationality of the reaction to the media-assigned "cause".

Way to go Obamanomics!

Meanwhile 44 million Americans are living at or below the poverty level.I am sure this "wonderful" and "fantastic" news will just make them jump in joyous celebration and send them into a frantic frenzy as they contemplate where to put all the extra cash they have "waiting on the sideline" and ponder their next move on how to "diversify their portfolios".Their future is so bright that i have no doubt there will be a massive jump in the manufacturing of dark tinted sunglasses in the very near future.

How in the world can these people not see how much better things are and how much better off they are?If they can't grasp the reality that things are getting so much better, then they will just have to try harder on making their "middle class American Dream" come to fruition.There is no room in the "party" for Debbie Downers and the naysayers.They can't be allowed to ruin the "wonderful and joyous" recovery taking place and ruin the beautiful minds and thoughts of those who just know that happy days are here again.

After all, the "rising tide of the stock market" will raise all boats still afloat.Let us celebrate this wonderful occasion while eliminating from our beautiful minds the 44 million who went down with the ship.And of course let us celebrate the well crafted propaganda,lies,and distortions that have gone into keeping the illusion of recovery possible.All hail the bright beacon that shines so bright for the purveyors of partisan winning team politics and the status quo.

Just Win Baby!!!!

:thumbsup:

"New orders for manufactured durable goods in August DECREASED $2.5 billion or 1.3 percent to $191.2 billion, the U.S. Census Bureau announced today. Down three of the last four months, this decrease followed a 0.7 percent July increase. Excluding transportation, new orders increased 2.0 percent. Excluding defense, new orders decreased 1.2 percent."

So transport was down BIG. If the overall report is that new orders DECREASED, 1.3%, what is the cheering about?

"Nondefense new orders for capital goods in August decreased $0.6 billion or 0.9 percent to $64.9 billion. Shipments decreased $0.2 billion or 0.3 percent to $65.4 billion. Unfilled orders decreased $0.5 billion or 0.1 percent to $487.2 billion. Inventories increased $1.1 billion or 0.8 percent to $130.8 billion."

So - outside defense, capital goods DECLINED. Shipments DECLINED. Inventories INCREASED (more unsold goods).

Just because the pump-monkeys run a headline that doesn't portray the truth, you should not be sucked in. To the person who thinks this is a good time to invest in the stock-market, all I can say is don't invest anything you are not willing to lose.

I am/was an Obama supporter, but this is not about Obama. This is the securities industry trying to steal your money - again.

cheer leading costume. Now wave those pom poms and do some cartwheels, its all in the program(ming).

Although it seems no matter what the market does the Dooms Sayers always have something negative to say.

If the Dow goes down the sky is falling, if Dow goes up it's because the sky is about to fall. I've been hearing Dow 6,000(right wingers anthem) for almost two years now and it's getting really old especially since we are almost at 11,000 now.

It seems the people who have the most to say about the market don't own a penny of stock, and are too paralyzed by fear to make any investments in the stock market at all and in many cases if they did own stock they make the very bad decision of selling it all shortly after Obama was elected.

The stock market is volatile, it always has been, nothing new. It can be a great investment if you buy good dividend stock if you've got some extra shoe or candy money to spend and you are not nearing retirement. However, if you are the scary, nervous type, stay away, it's not for you.