Economic Optimism Pushes Dow Near Record (Bloomberg)
Government reports showing end-2012 economic expansion and a bigger-than-expected decline in jobless claims last week led to increased optimism, and investors responded by pushing the Dow Jones Industrial Average closer to an all-time high. ‚??There is good news,‚?Ě E. William Stone, chief investment strategist at PNC Wealth Management in Philadelphia, said. ‚??Even though the GDP headline was a bit disappointing relative to expectations, we saw a revision up and the underlying components seem healthier. There‚??s less concern about the durability of the recovery.‚?Ě Update: unfortunately, late-day selling led to a slightly negative day for the market.
Economists Divided on Sequester’s Effects (MarketWatch)
With the sequester only hours away, economists remain divided on exactly what effects it will have on the markets. Austan Goolsbee, former chairman of President Obama’s Council of Economic Advisers, stated, “In my opinion, this will cut the growth rate below 2%, so there is a decent chance the unemployment rate starts to go back up again.” However, according to President G.H.W. Bush’s top economist, Michael Boskin, “It would take quite a stretch to make this a major macroeconomic event.”
Dollar Still Rising against Euro (Reuters)
Two major global political events, the political stalemate in Italy subsequent to that nation’s recent election, and the sequester arriving tomorrow in the United States, have contributed to the dollar’s continuing rise against the euro as investors take refuge in the former currency. “Investors are worried about Italy, whose election stalemate this week left unresolved the country’s commitment to economic reforms,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, D.C. “On this side of the Atlantic, meanwhile, big U.S. budget cuts could come as soon as Friday.”
Sign up to the Human Events newsletter