The markets are off to the races in a week that promises plenty of drama. The news hasn't been great this morning, with consumer confidence plunging in May. The Consumer Confidence Index checked in at 64.9, which was down from April's 68.7. That's the biggest drop since October of last year, although that month saw the Dow Jones Industrial Average
Consumer confidence can take a back seat today, though; markets are moving against that negative data. The Dow is up 0.65% while the Nasdaq
Bad news, big rise?
Varying outlets seem to be attributing the rise to positive housing news. Fresh data shows that housing prices fell at their slowest rate in more than a year. In an awful housing market, the idea of things getting "less bad" is a good thing.
That seems to be corroborated by price movements in Bank of America
The biggest gainer on the Dow by a slim margin right now is actually Caterpillar
However, I will note that the official Xinhua news outlet in China declared that the Chinese government will not roll out a massive stimulus in search of economic growth. While investors might be licking their chops at the prospect of another Chinese stimulus package (a reaction I disagree with), they're wrong to think any stimulus will be on par with the massive spending China rolled out during the financial crisis. To quote Xinhua, "The current efforts for stabilizing growth will not repeat the old way of three years ago."
Both Caterpillar and Alcoa have slid back from even more heady gains at the start of the day, so maybe investors have curbed their enthusiasm for a Chinese stimulus.
The week ahead
While markets might be moving in a peculiar fashion today, that's not anything out of the ordinary in the short run. In the long run, this week could sort out a lot of continuing story lines that are defining the global economy.
Notably, I'd encourage investors to keep an eye on the news around China's stimulus, which looks to be coming to a head; the Greek situation and the broader implication for larger countries like Spain and Italy; and the U.S. jobs number coming out this Friday. After a weak April showing, there will be a lot of attention paid to whether the low add of 115,000 last month was a blip or a sign of further deterioration to the job market.
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