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Thanksgiving Delivers Much To Celebrate

Stock Market News

December 2014

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Thanksgiving Delivers Much To Celebrate

Although sometimes you wouldn’t know it from reading the news coverage, the stock market continues to notch up record achievements, with the Standard & Poor’s 500 now some 200 percent higher than the lows experienced in 2009, and with the Dow hitting record highs. NASDAQ also rallied during the short week prior to the Thanksgiving holiday, boosted by an uptick in the share price of Apple, Inc. and gains in the bio-tech sector. As the markets headed toward the Thanksgiving weekend, even the naysayers couldn’t deny the numbers in front of their noses.

Bullish analysts appear to be encouraged by recent efforts of China and European nations to boost their sluggish economies, though some hold-outs continue to think slower growth in China and recession-bound European nations could still be a threat to U.S. markets. Worldwide, analysts and investors showed a predominately positive response to steps undertaken by China’s central bank to lower interest rates and by the European Central Bank’s stimulus measures – a plan to buy asset-backed securities to boost economic growth. These steps in Asia and in Europe are reminiscent of the Federal Reserve’s successful quantative easing program designed to shore up the U.S. economy and boost investor confidence.

The positive U.S. Gross Domestic Product report – released on Nov. 25 – also is a major factor in current economic optimism. Revised figures for the third quarter exceeded expectations – always a shot in the arm for investor confidence. Instead of seeing the initial reports of +3.5 percent revised downward, as expected, economists were heartened to see that revisions propelled the growth figures higher to +3.9 percent. It is important to note that the upswing reflected growth in all major sectors of the economy.

Growth in consumer spending had been somewhat lackluster lately but consumer spending was also revised upward in the new GDP report from initial estimates of +1.8 percent to +2.2 percent. Many investment analysts see this trend continuing, believing that lower gas prices at the pump will have a positive effect on retail sales as we approach the holiday season.

Overall, economists and Wall Street gurus are hoping to see an economic growth rate of 3 percent continue into the end of this year and the beginning of the next. This brighter outlook has led the Federal Reserve to plan to end its quantative easing (bond-purchasing program) and begin to raise interest rates. So far the anticipated changes have not adversely affected the economy or the markets, and many analysts believe the market is strong enough to handle an increase in rates.

The above is general commentary only and is not a substitute for specific advice from your professional tax and investment counselors.

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These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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