How are you feeling about financial markets?
Some votes are still being counted but investors appear to be happy with the outcome of mid-term elections. Major U.S. stock indices in the United States moved higher last week, and the American Association of Individual Investors (AAII) Sentiment Survey reported:
Stocks recovered some ground last week and then stumbled over unemployment.
Major U.S. stock indices faltered Friday after the Bureau of Labor Statistics (BLS) reported on a popular ‘lagging’ economic indicator – unemployment. (Remember, lagging indicators describe what has happened in the past.) The BLS reported:1, 2, 3
Why did the stock market fall when the economy is doing well?
The answer is that one reflects the past and the other anticipates the future.
The world remains full of opportunities and challenges.
Like an unexpected gust of wind that blows the hat off your head or flips your umbrella inside out, last week’s stock market performance startled investors.
The stock market tends to be a leading economic indicator.
Last week offered some insight to economics and stock market behavior. The U.S. unemployment rate reached its lowest level since 1969 and wages moved higher, yet major U.S. stock indices lost value.
Why didn’t stock markets move higher?
It wasn’t headline news…
But, if newsprint was still popular, last week’s key economic news would have appeared below the fold.
Did you hear the news?
The Markets
All investors are consumers, but not all consumers are investors.
Remember: Volatility is normal.
Major U.S. stock market indices climbed into record territory during August. They gave back some gains last week. Peter Wells of Financial Times explained:
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