Monday’s Mid-Day Movers: 3 Stories Driving Markets

The markets were a mixed bag on Monday afternoon. An absence of major economic catalysts seemed to encourage investors to take a breather after last week’s excitement. At 12:50 p.m.:

DJIA: -0.01% to 14,971.80 S&P 500: +0.19% to 1,617.52 NASDAQ: +0.37% to 3,390.98
Gold: +$2.80 to $1,467.00 Oil: +$0.32 to $95.93 per barrel U.S. 10-Year: +0.028 to 1.767%

Here are three stories helping shape the markets on Monday afternoon:

1) Will the Markets Tolerate an End to Austerity in Europe? “We’re witnessing the end of the dogma of austerity… We’ve been pleading for a growth policy for a year. Austerity on its own impedes growth.”

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Pierre Moscovici delivered this statement on Europe 1 radio on Sunday, and the sentiment has quickly become a mantra among those concerned with the economic situation in Europe. According to the final reading of the Markit Eurozone Composite Output Index, the region’s downturn expanded in April. Overall economic output, as measured against the headline Purchasing Managers’ Index, clocked in at 46.9, slightly above March’s reading of 46.5 but still stuck in negative growth territory… (Read more.)

2) Are We Headed for a Volatile Market Week? Last week was all about central banks and headline news as the European Central Bank cut interest rates and Wall Street celebrated a better-than-expected Non Farm Payrolls report on Friday. The S&P 500 managed to settle above the 1,600 milestone for the first time. The last time it crossed 1,500, the last century landmark, was in March 2000 — just before the “dot-com” crash that started soon after.

Nevertheless, bad news continues to be OK and good news continues to be great as the current stock market rally continues. Many analysts suggest that now there is a grand disconnect between financial markets and the real economy, and bubbles are being formed. Fundamentals eventually catch up to bubbles and “irrational exuberance” as we’ve seen so many times before… (Read more.)

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3) Is It Time To Be a Brave Investor? As the stock market continues to set new, all-time record highs and the Dow Jones Industrial index nears another historic milestone (15,000 level), investors remain cautiously skeptical of the rebound — like a nervous toddler choosing to ride a tricycle instead of a bicycle. Investors have been moving slowly, but stock prices have not — the Dow has risen 13 percent in 2013 alone. What’s more, over the last four years the S&P 500 index (which represents large companies) has climbed 140 percent; the S&P 400 (mid-sized companies) +195 percent; and the S&P 600 (small-sized companies) +200 percent.

The gains have been staggering, but like the experience of riding a bicycle, the bumps, scrapes, and bruises suffered during the 2008-2009 financial crash have caused investors to abandon their investment bikes for a perceived safer vehicle… (Read more.)

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