U.S. stocks advanced at first this week, promoted by the outlook raise for the world economy by the IMF (International Monetary Fund), then dragged down by a set of negative economic indicators. The three indexes were mixed this week.
The IMF released the latest “Global Economic Prospects” report on Tuesday (April 17), raising the outlook for the global economic growth for the next two years, predicting the economic growth will be 3.5% this year compared with the previous 3.3% projection. At the same time, the IMF also optimistically predicted the global economic growth will reach 4.1% next year.
The IMF raised the U.S. economic growth outlook by 0.3% to 2.1% and projected U.S. needs to maintain the low rate interest rate policy at least for the next two years. On the other hand, the IMF adjusted the estimate on euro-zone economy in January this year, forecasting a 0.3% decline in the economic amount, more optimistic over the previous 0.5% estimate.
In addition, the U.S. Commerce Department announced that the building permits in March had risen 4.5% to a seasonally adjusted and annualized total amount of 747,000, exceeding the market expectations and hitting the highest record since September 2008, which also injected a glimmer of a new impetus to the market.
In the European market, although Spain was once suspected to default on its debts, the improvement in the short-term treasury bond auction eased the investor concerns about the deterioration of the debt problems in Europe.
These news mentioned above strengthen the U.S. stocks. The three major stock indexes: Dow, Nasdaq and Standard & Poor’s 500 rose 1.50% 1.82% and 1.55% on Wednesday, respectively.
The morning sun never lasts a day, the U.S. Department of Labor announced that the jobless claim had fallen short of expectations on Tursday, followed by the worse-than-expected second-hand housing transaction data for March released by the U.S. National Association of Realtors (NAR), along with the April Philadelphia Fed manufacturing index which was also lower than the consensus estimates, the U.S. stocks appeared retreat. As of the Tursday’s closing bell, the three major indexes slipped together, the Dow fell 0.53%, the S&P 500 lost 0.59% and the Nasdaq dropped 0.79%.
On Friday, the G20 founded by the major industrial countries and emerging market economy entities issued a statement , promising to offer more than additional $430 billion to the IMF for the fight against the proliferation of European sovereign debt crisis.
The United Kingdom, Korea, Singapore and Australia also issued a joint statement on Friday, committing to inject approximately $41 billion into the IMF to preventively strengthen the bailout fund. In addition, companys such as MSFT and GE released bett-than-expected financial results, boosting the blue chip stocks to rise. The U.S. stocks opened higher on Friday, finally the Dow and the S&P 500 closed up 0.50% and 0.12%, respectively, while the Nasdaq slipped 0.24%.
Good factor is that the three major U.S. stock indexes have all maintained a good performance this year. The Dow has gained 6.64%, the S&P 500 has climbed up 9.62% and the Nasadq has seen an agreeable increase of 15.17% so far.
The volatilities of U.S. stocks indicate the market sentiment is still headed by the pace of economic recovery in Europe. As the United States and Europe face their respective heavy debt burden, the financial system needs a long time to eliminate the malignant tumor. Therefore, the market is not likely to see a clear direction in the short term.
But investors should also pay attention to the U.S. macroeconomic data which show improving signals from time to time, and the debt problems in Europe seem not to be same as the past which could lead to a sharp shock in the market, all these mean a step forward at least. In views of the U.S. companies, an investor is able to find many companies are posting stable earnings, coupled with the Fed’s loose monetary policy, threse factors will be likely to stimulate the U.S. stocks to continue to rise from time to time.
