Stocks rose once again because of this good hiring news as well as first time unemployment claims dipped and retailers surged in June.
A good article below of how so many economic disasters were barely dodged the last few years. However as the full article says, any or all of these calamities could reappear. Please see the whole article which I just retweeted: http://finance.yahoo.com/news/5-Economic-Disasters-That-usnews-2512535671.html?x=0
Here are the top financial stories of the day:
1) Retail sales and jobs reports send stocks higher-From the AP
A rebound in retail sales and strong jobs reports pushed stocks near their highest levels of the year.
U.S. retailers had their best June sales results since 1999 as shoppers were lured into stores by warm weather and deep discounts. Kohl's Corp., Target Corp., and Urban Outfitters Inc. each gained more than 6 percent.
Investors have been concerned that high gas prices would constrain consumer spending as people looked for ways to save money. The higher sales figures reassured markets that consumers were becoming more willing to spend again.
"The closest thing to an unadulterated barometer of our progress is same-store sales," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. Same-store sales for the 28 retailers who reported them on Thursday were up 6.9 percent. "Everything is tied to it: Sales drives profits, profits drive hiring and hiring drives sales. It's a neat, virtuous circle."
An improving job market likely helped. The number of people who made first-time claims for unemployment benefits dropped last week to a seven-week low of 418,000, the government reported. That's a sign that employers are laying off fewer workers.
Separately, payroll processor Automatic Data Processing said companies added 157,000 employees in June. The bulk of the hiring came from small businesses. The tally is more than double the number economists had forecast and far more than the 36,000 added the previous month. The report isn't always an accurate predictor of the Labor Department's monthly unemployment report, but has been more of a bellwether in recent months. The Labor Department's report will be released Friday.
The Dow Jones industrial average gained 93.47 points, or 0.7 percent, to close at 12,719.49. The Standard and Poor's 500 index added 14 points, or 1.1 percent, to 1,353.22. The tech-focused Nasdaq composite closed at 2,872.66 after gaining 1.4 percent. It briefly traded at a new high for the year of 2,877.
2) ADP, Jobless Claims Suggest Improvement-From the Wall Street Journal
Two new jobs reports indicated that the labor market may be improving from recent weakness, but any rebound remains subdued.
Private businesses added a stronger number of jobs in June than expected, according to a report released Thursday. Separately, the number of idled U.S. workers making new claims for jobless money fell last week.
Private-sector jobs in the U.S. rose by 157,000 last month, according to a national employment report published by payroll giant Automatic Data Processing Inc. and consultancy Macroeconomic Advisers.
Economists surveyed by Dow Jones Newswires had expected ADP to report a job gain of just 95,000 last month. The May data were revised lower to show a rise of 36,000 versus the already meager 38,000 first reported.
The ADP report said "June's figures suggest that the economic recovery, which slipped in the spring, might have found new traction in early summer."
The ADP survey tallies only private-sector jobs, while the Bureau of Labor Statistics' nonfarm payroll data, to be released Friday, include government workers. In recent months, state and local governments have been laying off workers to close budget gaps.
Economists surveyed by Dow Jones Newswires expect total nonfarm payrolls rose by 108,000 in June, double the weak 54,000 reported in May. The ADP number may prompt forecasters to lift their Friday's payroll estimates.
The June unemployment rate is expected to remain at 9.1%.
The latest ADP report showed large businesses with 500 employees or more added only 10,000 new employees, and medium-size businesses added 59,000 workers in June. Small businesses that employ fewer than 50 workers hired 88,000 new workers.
Service-sector jobs increased by 130,000 in June, while factory jobs, which had fallen in May, rebounded by 24,000 in June.
ADP, of Roseland, N.J., says it processes payments of one in six U.S. workers, while Macroeconomic Advisers, based in St. Louis, is an economic-consulting firm.
New claims for unemployment benefits dropped by 14,000 to a seasonally adjusted 418,000 in the week ended July 2, the Labor Department said Thursday.
Economists surveyed by Dow Jones Newswires had forecast a decline of 3,000 new claims.
3) 5 Economic Disasters That Haven't Happened-From US News and World Report
You're in a lousy mood. Justifiably so. It's been two years since the recession ended and a recovery supposedly began, yet the job market still stinks, housing remains a mess, and the bozos in Washington seem to do more harm than good. Consumer confidence is getting worse, not better, and talk of a double-dip recession hovers like a thunderhead over a summer barbecue.
Those are legitimate problems that are showing up in the real economy. Economic growth so far this year has been disappointingly low, and far below levels needed to notch a meaningful pickup in hiring. Many consumers aren't spending because they're worried about jobs, and many companies aren't hiring because consumers aren't spending. Policymakers in Washington, meanwhile, seem to have run out of ideas for how to stimulate the economy. Instead of action, we're settling into a grudging acceptance of stagnation.
The answer is that some of them are already dissipating. And when it starts to look like there's more turbulence behind than ahead, it could mark the moment when the economy turns the corner in earnest. Here are five potential disasters that have worried economists but failed to materialize:
A major spike in oil prices. At the beginning of the year, oil was about $90 per barrel. As unrest in the Middle East intensified, prices peaked at more than $113 per barrel. Economists think that $120 oil might be the tipping point at which a double-dip recession becomes likely. But even below that level, rising energy prices cut into disposable income, which means people have less money to spend on other stuff. And $4 gas in particular tends to depress consumer confidence far more than other types of price increases. So, much of the economic weakness so far this year is due to the real and psychological impact of rising oil and gasoline prices.
Financial panic in Europe. It's beginning to seem like an annual summer ritual: Greece or some other peripheral European nation nearly goes bankrupt, roiling markets until policymakers sweep in at the last second with a bailout. But the longer this goes on, the less likely a crisis actually becomes. One of the big problems with the financial situation in Greece, Ireland, Portugal, and perhaps Spain is that European banks hold much of their debt and would incur steep losses if those nations default on their obligations. That leads to the "contagion" scenario, in which banks across Europe, and perhaps the world, begin to call in their loans and refuse to lend to each other. But every time Europe's bailout barons forestall the day of reckoning by six or 12 months, they give the banks more time to offset potential losses and prepare for a default, if it happens
Runaway inflation. Since the Federal Reserve began "printing money" in 2008--through the huge bond-buying program known as quantitative easing--inflation hawks have been warning that the United States is on its way to becoming Weimar Germany. It hasn't happened, not yet anyway. In fact, the bigger worry for a while wasn't inflation, but deflation, since demand for many products fell so sharply during the recession that some prices plunged. Now, inflation has picked up enough to suggest that deflation isn't a problem. But widespread inflation doesn't look like much of a problem either. It is now about 3.5 percent on an annual basis, with gasoline and some food items rising by more than that over the last year. But many economists expect gas and food prices to come down over the next several months, which ought to produce tamer inflation of 3 percent or so.
A plunging stock market. As it became apparent earlier this year that the Fed would end its second quantitative easing program--"QE2"--on schedule at the end of June, some analysts worried that the stock markets would nosedive. The Fed used quantitative easing to boost demand for stocks and other risky assets, by buying up many safer investments, such as treasury securities and other types of bonds. That left investors with little choice but to put their money into the stock market, and the Fed's program did in fact coincide with a huge bull market in stocks. So it stood to reason that investors would bail out of stocks once the Fed stopped buying bonds.
A housing-led depression. The housing market usually springboards the economy out of recession, since pent-up demand for homes triggers a surge in spending on real estate and everything related to it, from HVAC units to furniture and appliances. Obviously that hasn't happened this time around. The housing bust is now in its fifth year, with average home prices down by more than 30 percent and continuing to fall. Economists have repeatedly underestimated the severity of the housing bust, predicting that prices would bottom out in 2009, then in 2010, and now in 2011. They've been repeatedly wrong, and the falling value of homes is one of the heaviest stones around the necks of consumers right now, since it reduces household wealth and makes people feel gloomy about the future.
Quote of the Day from Dave Ramsey.com:
Knowing is not enough; we must apply. Willing is not enough; we must do. — Johann Wolfgang von Goethe
No comments:
Post a Comment