Stock market closes in big way as stocks close in big markets, says Bloomberg
Stock markets closed with big gains on Monday, as the Dow Jones Industrial Average closed above 11,000 for the first time since May 2009.
But the market’s biggest one-day gain of 810 points was short-lived, ending at a record low of 1,726.3 points.
A new 52-week high is set for Tuesday, with a new 52 week low set for December.
In fact, it’s been nearly three years since the Dow has closed above 12,000.
The Dow’s weekly gain since June 9, 2009, according to data from FactSet.
At one point, the Dow was close to an all-time high of 14,000, but it closed below 10,000 on March 10, 2011.
What do the numbers say about the stock market?
There’s a clear correlation between stock prices and inflation, which is why the markets have been rising.
The average annual increase in the S&P 500 over the past 20 years has averaged 3.4%, according to FactSet data.
But a major reason for this rise is the stock bubble that followed the 2008 financial crisis, when the U.S. economy contracted and the financial markets took a hit.
So far, stocks have risen at a faster rate than the economy, which has grown by 3.6% over the same period.
While stocks have gained in the wake of the financial crisis and are poised to reach new highs, they have done so by being overpriced, which means they’re overpriced in a way that doesn’t generate a return.
It’s a trend that is expected to continue.
“The market has been very aggressive in its buying,” said Mark Luskin, an economist at Credit Suisse Group AG in Zurich.
“It’s just that this overprice, it doesn’t seem to be a good place to be.”
“There are many other assets out there, but the stock, it is the largest,” he added.
“The fact that the market is getting so high, I think is a good sign.”
What’s the biggest risk in the stock sector?
One of the biggest risks to stocks in the future is a decline in interest rates, which could push down stock prices.
As the Fed raises rates, stocks will fall, which would reduce demand for assets and hurt growth.
And as a result, stocks could also fall in value.
In a June 15 letter to Congress, Fed Chairwoman Janet Yellen said the Fed would continue to “diversify” its holdings to support the economy and avoid a “catastrophic” recession.
If that happens, investors will have to consider buying stocks to keep their money safe, Luskins said.
Can the Fed change its tune?
The Fed has said it will take a longer-term view on monetary policy, but so far it has been reluctant to make changes.
Some experts say the Fed could take another step by increasing its bond-buying program to address low interest rates and help support the housing market.
Will stocks go back up?
Yes, said Jason Burt, chief investment officer at S&p Capital IQ.
But, he said, “If the market continues to be undervalued and investors are buying, then stocks are going to go back down.”
The latest data on stocks in America, courtesy of the Bureau of Labor Statistics.
You can follow David Hogg on Twitter at @DavidHoggDC or follow him on Facebook at david.hoggDC.