Wednesday, 28 November 2007

US stocks gain despite fall in consumer confidence and house prices

US stocks rebounded sharply yesterday with the S&P gaining 1.5 percent.

Other US economic indicators, however, pointed in the opposite direction. Bloomberg reports:

Consumer confidence fell more than forecast in November as Americans struggled with surging fuel costs and falling home prices.

The Conference Board's confidence index decreased to 87.3, the lowest since the aftermath of Hurricane Katrina in October 2005, from a revised 95.2 the prior month, the New York-based group said today. The index averaged 105.9 last year...

The Conference Board report comes after S&P/Case-Shiller's index showed home prices fell 4.5 percent in the third quarter form the same time last year, the most since record keeping started in 1988...

The housing recession will drive down property values by $1.2 trillion next year and slash tax revenue by more than $6.6 billion, according to a report issued today by the U.S. Conference of Mayors. The 361 largest U.S. cities will experience a combined loss of $166 billion in economic growth, led by $10.4 billion in the New York-Northern New Jersey area, according to the study.

An expected rate cut by the Fed, however, may help keep markets supported in the meantime.

A rate cut is much less likely in the euro area, especially with yesterday's economic indicators out of Europe. From Bloomberg:

Business confidence in Germany and France unexpectedly rose in November, suggesting European companies are coping with record oil prices and the euro's gain.

The Ifo research institute in Munich said its index of German sentiment, based on a survey of 7,000 executives, increased for the first time in seven months, to 104.2 from 103.9 in October. In France, a gauge of confidence among 4,000 manufacturers rose to 110 from 108, Paris-based national statistics office Insee said...

Italian business optimism slipped to the lowest in almost two years, the Rome-based Isae Institute said today...

German inflation accelerated in November to the fastest pace since records began in January 1996 with consumer prices rising 3.3 percent from a year earlier, using a harmonized European Union method, the Federal Statistics Office in Wiesbaden said today.

No comments:

Post a comment