Sure, the economy is “recovering,” but there are still issues with consumer spending, especially on non-essential durable goods.
The headline durable orders reading came in at 0.8% growth in April, above the consensus 1.3% decline but below the revised 3.6% growth in March.
For the economy to really confirm the stock market, we need to see growth here.
This will also help to drive buying in small-cap stocks that trade with the economy.
The jobs scene is finally beginning to look better since the Great Recession in 2008.
Jobs creation came in above 200,000 for the fourth straight month.
The unemployment rate held at 6.3%. With the latest batch of jobs numbers, the economy has now recovered all of the 8.7 million jobs lost during the recession.
The Federal Reserve will likely refrain from raising interest rates until sometime in mid-2015, but continue to cut its bond buying to zero by year-end.
The fact there’s really a lack of investment alternatives to the stock market is helping.
With the yield on the 10-year bond at around 2.5%, I doubt investors or institutions are rushing to buy.
Why would you when you can buy higher-yielding dividend paying stocks with capital upside?