Why the Market Will Celebrate This Fourth of July

Forget Q1's lousy GDP. This week has the makings of a celebration of positive economic news.

Jun 30, 2014 at 1:00PM
Take The Long View

The Dow Jones Industrial Average (DJINDICES:^DJI) was down 18 points at 1 p.m. EDT Monday . With the Independence Day holiday coming up Friday, many expect this week to be about as slow and uneventful as it gets on Wall Street. 

Those people could be dead wrong.

Why? Because this week we will see a slew of new economic data that could prove that the first quarter's shocking 2.9% GDP decline was an anomaly and that the economy is churning ahead at full speed.

It's already starting. The National Association of Realtors reported this morning that its seasonally adjusted index of existing-home sales jumped 6.1% in May. This is the largest jump in the index since the first-time homebuyer tax credit expired in April 2010.

On the news, the Dow abruptly erased early losses and the Nasdaq (NASDAQINDEX:^IXIC) jumped to a 14-year high.

On Tuesday, the markets will receive reports on manufacturing and auto sales. The Bureau of Labor Statistics is then on Thursday due to release its "Employment Situation" report for June.

What to expect from this month's jobs report
The U.S. labor market has shown steady gains in the neighborhood of 200,000 jobs added per month since 2011. While most economists would understandably hope for stronger gains, this slow and steady improvement is far better than the status quo of 2008 and 2009.

US Change in Nonfarm Payrolls Chart

US Change in Nonfarm Payrolls data by YCharts.

It is possible that in the aftermath of the first quarter's ugly GDP performance, a pullback on hiring in June could cause a temporary hiccup in the labor market recovery. 

Early indications are that this likely did not happen. The unemployment rate declined through the winter and spring, hardly skipping a beat as the country bundled up for the unusually cold weather. The four months ending in May each saw more than 200,000 new jobs added, which is the first time four consecutive months have seen that level of job growth since 1999. 

Last week, the Labor Department reported that weekly initial applications for unemployment insurance declined to a seasonally adjusted 312,000. This metric has fallen 9% since the beginning of the year. Two weeks ago, the total number of people receiving unemployment fell to a six-year low.

All these data points taken together strongly indicate that jobs data will continue to improve in June.

So while Wall Street may be taking a vacation this week, a big jobs report on Thursday could be exactly the fireworks the market needs to break through to new highs. Who knows, we may all be celebrating a Dow 17,000 before the trading week is done.

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Jay Jenkins has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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