After a monumental post-election slide, the Dow Jones industrial average started to creep back up this week. Seizing onto hope that Washington will reach a deal on the so-called “fiscal cliff,” and with Black Friday around the corner, investors are expressing more confidence in the stock market than in weeks past.
On Monday, the Dow closed up 207 points, or 1.7 percent. That’s a huge improvement since President Barack Obama and a divided Congress were re-elected. After the Nov. 6 election, the market slid a total of 657 points. On Monday, the Standard & Poor’s 500 Index rose 27.01 points, or 2 percent. The Nasdaq composite gained 62.94, or 2.2 percent. Much of this was pushed by Apple, which had its biggest one-day gain since April.
Bipartisan Talks Give Investors Confidence
Analysts say that investors are feeling comforted as Obama and congressional leaders continue their talks about the fiscal cliff, a Jan. 1 deadline when tax increases and government spending cuts are set to take effect. It seemed having Obama and the Republicans at odds made skittish investors worried. Although both side are still bickering about tax increases for the wealthiest Americans, there have been some suggestions of progress.
“It is quite clear that both sides want to come to a compromise and that a reasonable compromise is available,” David Kelly, chief global strategist for J.P. Morgan Funds, told the Associated Press.
Still, others say the bull market is continuing because confidence levels aren’t where they should be. Despite the recent increases, American equities have lost a value of $806 billion since Obama was re-elected. Brian Jacobsen, chief strategist at Wells Fargo Advance Funds, said the stock market looks cheap because investors are pessimistic about future growth.
“You can get big and rapid moves in the market when expectations are so low,” he told Bloomberg News.
Retail Sector Looks for Black Friday Boost
At the same time, the U.S. retail sector is closely watching as Black Friday and Cyber Monday approach. Experts view the impending shopping spree as another make-or-break year for many retailers. The National Retail Federation (NRF) says that up to 147 million people will shop in stores and online this coming weekend, a decrease from 152 million last year.
The NRF said shoppers are being more cautious than last year and are always looking for the best deals. Analysts say the average holiday shopper will spend $749.51, slightly up from the $740.57 that was spent last year. Americans are still looking for ways to cut corners, comparative shop and spend less, NRF said. Still, the outlook is more optimistic than it has been in years past.
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].
- Mozee, Carla. (2012, November 17). Budget talks, Black Friday may sway U.S. stocks. The Wall Street Journal. Retrieved from http://www.marketwatch.com/story/budget-talks-black-friday-may-sway-us-stocks-2012-11-17?siteid=rss&rss=1
- Associated Press. (2012, November 19). Los Angeles Times.
- Kisling, W., et al. (2012, November 19). S&P 500 in Cheapest Bull Market Since Ronald Reagan. Bloomberg News. Retrieved from http://www.bloomberg.com/news/2012-11-18/s-p-500-in-cheapest-bull-market-since-reagan-trade-26-from-peak.html