Good News to Share with your Clients

Thanksgiving Comes Early: First Week of November Is Positive

Thanksgiving came early this year, as the first week of November delivered consistently good news about jobs, the economy, interest rates and policy. Additionally, stocks rose, continuing their steady gains since August.

Better Job Picture -- The economy gained 151,000 jobs in October, the first overall gain since May, and the gains were twice as big as expected. More than 1.1 million private sector jobs have been created this year.

October private sector payrolls rose 159,000, nearly double the 80,000 job increase expected by Bloomberg. The unemployment rate remained at 9.6%, which means too many Americans remain out of work. However, the jobs report details were generally positive with a rise in both hours and wages.

Economy Improving -- Measures of the service economy, manufacturing and retail sales rose more than expected in October. Productivity rose 1.9% in the third quarter, which is a positive sign for future growth.

Federal Reserve Buying Bonds -- The Fed announced it will purchase additional bonds to keep interest rates low, which should help support the economy and avoid deflation.

Elections Over -- Historically, stocks tend to rise after midterm elections, regardless of who wins, because much of the political uncertainty has ended. We may see less uncertainty moving forward. The return to "divided government" reduces the chances of significant new legislation. While tax rates are still scheduled to increase at the end of the year, an agreement to extend the tax cuts seems a little more likely.

Solid Third-quarter Earnings -- Corporate earnings rose 33% on average in the third quarter based on 82% of the S&P 500 companies reporting. Earnings growth has supported rising stock prices in the past.

Dow at a Two-year High -- On Nov. 4, the Dow reached its highest level since early September 2008. Corporate earnings have increased more quickly, returning close to their 2007 highs, which means many stocks are attractively valued and may be an opportunity to consider.

In Summary
Many investors felt that the economy would stay weak because problems were too large. While a week of good news doesn't eliminate all the challenges, it reminds us that many actions have been taken to help improve the growth of the economy, companies and individuals constantly work to improve their situation, and the country continues to be resilient. A week of good news reminds us that we have much to be thankful for.