The mixed signals on the direction of the economy since the first of the year have traders shifting on a dime from buying to selling. Friday afternoon was a classic example: The Dow Jones industrial average plunged nearly 170 points in early afternoon trades, but by the time the bell concluded trading at 4 p.m., the Dow finished up 10.05 points and remained above the 10,000 mark.
The Dow closed at 10,012.23 as investors throughout the day digested a U.S. jobless report that lowered the nation’s unemployment rate from 10 percent in December to 9.7 percent in January.
Indicators of a firm direction for the U.S. economy remain unclear, said Don Jud, professor emeritus of business administration at the University of North Carolina at Greensboro. While there are signs of recovery, some economic indicators still point at weakness.
“Last year it seemed that everybody was on the economic recovery bandwagon, so that was helping out the stock market,” said Mike McCully, director of economics and international business at High Point University.
So far this year, conflicting information and reports have come out about the economy, McCully said.
“There’s worries about the recovery being very slow. It’s not clear how fast we’ll really start growing in a clear and sustainable way,” he said.
The economic uncertainty isn’t limited to America. Several European nations are facing increasing national debt loads and the spectre of default, which has weighed on markets globally, Jud said. And some of the swings in the market stem from traders who convert cash to stock buys when certain stocks reach low values. That buying, in turn, can result in rapid turnarounds in trading, Jud said.
pjohnson@hpe.com | 888-3528
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