BusinessDesk: Investors looking for clues confirming that the recovery of the world's largest economy is on track

BusinessDesk: Investors looking for clues confirming that the recovery of the world's largest economy is on track

By Margreet Dietz

A year that few investors would care to describe as steady is set to end with the major stock indexes on both sides of the Atlantic just about where they started it.

Last Friday, the broad Standard & Poor's 500 index broke through its 200-day moving average, ending the day with a 0.6 percent advance for the year, according to Reuters.

Ahead of the Christmas break, equity markets were lifted by signs of further strength in the American economy. For the five days ended Dec. 23, the Standard & Poor's 500 Index rose 3.7 percent, the Dow Jones Industrial Average advanced 3.6 percent and the Nasdaq Composite Index added 2.5 percent. Wall Street returns to action on Tuesday morning in New York though the volume of trading is expected to remain thin until the new year.

Ari Wald, a technical strategist at Brown Brothers Harriman, told Reuters that the key level on the S&P 500 is 1,260. The index closed at 1,265.33 on Friday.

"A breakout above this supply would argue for continued seasonal strength through the first quarter of 2012," Wald said.

Investors will be looking for the latest clues confirming that the recovery of the world's largest economy is on track. On Tuesday, reports may show home prices in 20 US cities fell at a slower pace and consumer confidence rose to a five-month high, according to Bloomberg News.

Last week, separate reports indicated strength in orders for US durable goods in November, as well as sales of new homes and new unemployment claims.

“The US economy is improving more than expected,” Hideyuki Ishiguro, assistant manager at the investment strategy department at Okasan Securities in Tokyo, told Bloomberg News. “Pessimism is easing among American consumers due to a recovery in the job market and some stability in the stock market.”

Investors will also watch the Chicago Purchasing Managers Index and pending home sales data, both due on Thursday.

The holidays will provide a short respite for the eurozone. No credit rating agencies are expected to act at least until the new year has begun. Standard & Poor's is expected to release its verdict on debt ratings for 15 euro zone countries in January, two independent European government sources told Reuters.

Italy will sell 3- and 10-year bonds on Thursday, and a successful auction would give the euro some support.

The Stoxx 600 Index had a 0.9 percent increase on Friday, bringing gains for the week to 3.5 percent. Stocks exposed to the US economy paced the advance.

(BusinessDesk)

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

7 Comments

Oh yeah recovery is at hand...all the mountains of debt have gone pooof and not a single bank is spitting the dummy...humbug.

Nothing has changed....the can is still being kicked down the road to nowhere but greater debts and deeper misery for fools who believe the tripe spewing from those who make a living in the markets using other peoples money....

For a more accurate take on the shite world economy...look to the Chinese moves to set up govt credit agencies...everything will be AAA...count on it....Look also at the American 'play it again Sam' budget financing farce....or go read why Merv King of the BoE is having trouble keeping his underwear clean....of course you could ask Sarkozy why he got so miffed at Cameron giving him a brown eye over the super duppa deal that lasted all of 12 hours...

Not enuff for you?....try discovering how many billions have to be refinanced by Spain and Italy and France this 2012...more than the total credit available...and that will lead you into the box of smoke and BS mirrors of the ECB that declares it will not bail out the sovereign states with cheap printing and other trickery....while doing exactly that on a daily basis...

Yes sir we have us a recovery......the funeral will be very soon.

I find it interesting on how desperate ppl are for the game of musical chairs to continue....look for any excuse no matter how pathetic to stay in or get back into the "game" over a fear of missing a margin of profit.....yet produce no good....if they are that desperate to stay in whats it going to be like when they all want out? 

As you say the major problems have not been solved, if they had, then yes OK, but nothing has changed...

Merv King I find interesting to listen to....he seems about to blow a seam over the risk of going into a depression........when 70% of your econony is consumerism and then a decent % (15%?) is banking/finance there is nothing left when either collapses/goes...the effects dont look minor....I cant blame him, and the Polies seem hell bent on making sure it happens.....bugger........

2012, France has a huge sum due in Jan and Italy a similar sum in Feb I think....I cant see anyone buying the Italian ones but the ECB.....it has to buy because no one else wants to or can.......

Pyre comes to mind.......I cant see how this will be a peaceful event....especially as its going to be over many years....

regards

 

Apple ( AAPL ) started the year at $US 327 per share , and ended it at $US 403 . A tidy 20 % gain ...... proving that it doesn't matter so much what state the economy is in , individual investments can prosper ....

.... the trick is , if it hasn't gone up by year's end , don't buy it back in January ...... easy !

Couldn't agree more Mr Bear, was typing up something similar but you beat me to it.

 On Tuesday, reports may show home prices in 20 US cities fell at a slower pace 

wow, things are really bad if prices FALLING at a slower pace is greeted as good news.

 

Put it this way , Matt in Auck in Adelaide  , if you fell off the top of Westpac House in King William Street ....... and as you approached the hard sidewalk 130 metres below , you began decelerating ........

.. .. would you complain about losing speed  towards the bottom of  the descent ?

JKs old mates will love this....

 "With the break-up of the Euro still a distinct possibility according to economists and companies, we take a look at what new currencies such as a new Greek drachma and Portugese escudo would be worth in a post-Euro europe"

 http://www.telegraph.co.uk/finance/financialcrisis/8960332/Graphic-How-exchange-rates-could-collapse-after-a-Euro-break-up.html

 and for the faint hearted...!

 lenders are depositing any new cash back with the ECB at a loss in order to guarantee safety.

"As we enter 2012, it seems the word that best describes the outlook for the UK economy is 'bleak',"