The U.S. stock market opened lower today but it surged after an research report came out indicating that consumer confidence is at the highest level since September of last year (before all the carnage). As a result, all indexes are up close to 2% on the news.
Economists were predicting that the Conference Board’s Consumer Confidence Index would be at 42.3 but the figure came in at 54.9, well above expectation. Of course, as a long investor, this is amazingly positive news because the two-thirds of the economy is based on the consumer. The argument is that with consumer spending, business earnings will again rise and that’s another huge piece of the recovery pie.
Not surprisingly, all stocks that are levered to the consumer jumped. Retailers, homebuilders all jumped 4, 5, 6 percent today. In a day like today, it doesn’t really matter which one you own because they are all going higher.
Many people have been skeptical of the market because of the huge run (the Dow has been up 25% from the lows in March 9), especially considering that all the banks issued so many shares of stocks and that the long term economic future still looks grim. On the bull case though, people keep pointing to the record levels of cash in the sidelines, and that it will eventually come back to the market.
It will be interesting to see what happens from here on out, but the bulls definitely have an upperhand today. One thing is for sure though, the easy money has already been made.