Stock Market Is No Longer An Economic Indicator

By
Real Estate Broker/Owner

I'm not sure if the stock market was ever an economic indicator, but if it ever was, those days are behind us.

According to a CNBC.com article, the latest stock market rally has been fueled by traders rather than investors.  "Wall Street's stunning six-week rally has been fed more by traders looking to take advantage of quick swings in the market than investors with a long-term view." 

NYSE Euronext CEO Duncan Niederauer was quoted as saying, "The volume in March hasn't convinced me that it's the kind of volume that you need to see to believe it was the real beginning of a turnaround." 

And why should it?

In just the past five months nearly 3 million Americans have lost their jobs.  The "real" unemployment rate is 15.6%.  Banks continue to face massive losses despite reporting manipulated "earnings".  And undeterred by precipitous home value declines and foreclosure moratoriums, the real estate market is virtually unchanged from last year in terms of the month's supply of housing.

I understand that often times a stock market rally will precede an economic rally, but I am hard pressed to find any evidence that would indicate that the fundamentals are in place that will allow for an economic recovery any time in the calendar year.

 

Comments (2)

Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

We can only hope that it is turning but I think it will continue to climb till 1st part of August and then we will see what a real bottom looks like.

Apr 25, 2009 02:22 PM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Hi Mark

It's sad, but I have to agree with you.

Good luck and success.

Lou Ludwig  

Apr 25, 2009 02:45 PM