News Brief from AXA Equitable:
Highlights from recent notable market news reports
Feb. 17, 2012
Better than expected U.S. labor, housing, and manufacturing reports drew attention this week away from concerns over Greece and the euro zone. U.S. unemployment claims fell to their lowest level in nearly four years, mid-Atlantic manufacturing orders expanded at the fastest pace in four months, and January housing starts exceeded expectations, spurring index gains and degrees of optimism on Wall Street.
Chris Rupkey, economist at Bank of Tokyo-Mitsubishi, gushed to Bloomberg that “the economy’s wheels just keep spinning faster and faster,” (Bloomberg: “Drop in Jobless Claims Points to Spending Gains,” by Timothy R. Homan and Bob Willis, February 16, 2012). Less was more for Edward Crotty, of Davidson Investment Advisors, who told the Journal that he’s “not sure there’s enough strength for the market to run away at this point, but stock valuations can go up merely on an alleviation of worries.” (Wall Street Journal: “Dow Closes at Higest Level in Nearly 4 Years,” by Jonathan Cheng, February 17, 2012)
News of domestic growth coincided with glimmers of hope on the Greek debt crisis, or at least evidence of the market’s resiliency in absorbing euro zone shocks. Bill Street of State Street Global Advisors told the Journal that “the market generally has digested the Greek issue and sees it as a nonsystemic issue at this point.” (Wall Street Journal: “As Vector, Greece Loses Its Potency,” by Charles Forelle, February 15, 2012).
Meanwhile, economists cautioned that rising oil prices could emerge as the next threat to the fragile economy (Wall Street Journal: “Oil Rise Imperils Budding Recovery,” by Ben Casselman and Conor Dougherty, February 16, 2012). Oil prices have reportedly climbed sharply in recent weeks, as tensions spill in the Mideast. This “has the power to derail an economic recovery that’s not looking very strong already,” Paul Dales, of Capital Economics, told the Journal.
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