Top 3 Reasons Markets Were Down Despite Apparent Economic Recovery
Markets closed down on Wall Street today: Dow -0.51%, S&P -0.32%, Nasdaq +0.05%, Oil -0.27%, Gold -0.22%.
Today’s markets were down because:
1) Jobless figures. Giving the markets an early boost this morning was news that last week initial jobless claims fell below 400,000 for the first time since early April. Though that number still seems high, economists say that, when jobless claims fall below 400,000, that means the economy is adding more jobs than it’s losing. All of the major indices were up this morning on the news, climbing into the early afternoon before taking a dip. The Dow climbed as high as 12,380 points, but unfortunately wasn’t able to hold onto the morning’s gains, ultimately settling in the red, as did the S&P 500, with only the Nasdaq Composite holding on to enough of its gains to finish the day up, though well below its high just before noon.
2) Pending home sales. Yep, those improved as well. According to the National Association of Realtors, pending home sales continued to increase in June, up 2.4% over May and a whopping 19.8% over June 2010. Last month is only the second since April 2010 to show year-over-year growth, and this upward trend bodes well for the housing market (NYSE:IYR), which has been slow to recover from the financial crisis.
3) Debt ceiling. Until Congress agrees on a new budget and a plan to raise the debt ceiling, markets are going to continue to be weighted down by the pressure of impending default. It doesn’t matter that unemployment may start to decline, or that pending home sales are up — if the government defaults on its obligations, all the progress that’s been made so far will be thrown out the window.