Newspaper article The Christian Science Monitor

Stock Market Gains in Positive Response to Better Economy

Newspaper article The Christian Science Monitor

Stock Market Gains in Positive Response to Better Economy

Article excerpt

SPURRED by low interest rates, the falling price of oil and other commodities, rising consumer confidence, and evidence that more Americans are now finding jobs, the United States stock market continues to post modest gains in share prices. Some analysts predict the stock market advances will last through December and into the first quarter of 1994.

"The stock market thrives on `moderation,' " the word that now best describes the US economy, says Larry Wachtel, a vice president with the investment house Prudential Securities Inc. "The US economy is performing far better than had been expected." As long as interest rates do not rise substantially, the stock market should continue to show gains, Mr. Wachtel adds.

Last week's economic news underscored an economy advancing at a moderate clip: The Conference Board announced that its consumer confidence index rose nearly 11 points in November, the biggest jump for the index this year. Personal income and consumer sales also are up, while new housing sales remain strong. On Friday the Labor Department announced the steepest drop in unemployment in 10 years, with the jobless rate falling to 6.4 percent in November from 6.8 percent in October. At the same time, the Commerce Department said the index of leading indicators rose 0.5 percent in October, the third straight month in which the index has risen. Growth to continue, slowly

Wall Street sees the statistics as forecasting sustained, not fervid, inflationary economic growth. Many economists now anticipate slightly slower growth in the first quarter of 1994 than in the fourth quarter of 1993. And that adds up to good news for equities, say market analysts such as Wachtel.

The stock market has dipped slightly in recent weeks, with the Dow Jones industrial average largely stalling in terms of posting per share gains. The broader NASDAQ composite index, which monitors many small company stocks, has declined slightly more than 3 percent so far this month. …

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