Favorable U.S. statistics induces investors to take risks

Tuesday brought in a few more encouraging signals

In brief: Since the week’s beginning U.S. statistics has been sending a series of positive signals. On Monday it became clear that in June Americans’ expenses surpassed earlier expectations, owing to 4% growth in car sales.

Schiller index (displaying growth of home prices in 20 largest American cities) grew in the last 12 months by 4.23%, while real estate analysts predicted a mere 3.1% increase. Moreover, consumer confidence index rose to 53.5 points, with the predicted increase at no more than 50 points. Consumer optimism in June surpassed expectations as well.

As for the PMI index for August, it went down slightly, comparing to the record 6-years’ uptick in June, but still managed to reach 56.7 points, confirming expansion (since 50 points + value witnesses to positive economic dynamics). At the same time, yesterday data on U.S. chain store sales were published pointing to 3% growth comparing to the same period in July. Today the ISM (Institute for Supply Management) index dealing with the state and current dynamics of the U.S. industrial sector was particularly good news for investors. ISM value for August was estimated at 56.3 points, surpassing both the modest predicted 52.9 points and the July value of 55.5 points. It is essential that the ISM growth in August provides for the building up of production volumes and more new jobs in the U.S. industry.

As I stressed two days ago, every value, that exceeds forecasts with actual results, tends to push the indices higher, since abatement of economic indices in August was included into share price after the three week-long retreat. The closest point of resistance for S&P500 index is the 1070 points value. Today the combined value of shares of 500 biggest U.S. companies bridged over the threshold of 1010 points in a matter of seconds following the posting of ISM data. In just one hour after the opening of the main trading session in the U.S. markets, the share indices grew by an average 2.5%, while the S&P500 surpassed 1075 points. The next barriers for S&P500 will be the range of 1078-1080 points and the following psychological threshold of 1100 points. On Monday I suggested the S&P500 index will reach 1100 points within the next week or two. Now it looks like this forecast is coming true. The U.S. dollar is losing value, while the gold prices are going down in front of our eyes. At the same time, investment assets are coming out of their save havens.

Elena Koschiko
2010-09-02 08:42, Economics.

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One comment к “Favorable U.S. statistics induces investors to take risks”

  1. blackbird rider Says:

    One can never know for sure what a deserted area looks like

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