U.S. Stocks up due to weak economic data, but why? Because..

Stocks up on hopes Fed stimulus will continue



Today – Tuesday October 22, 2013

  • September jobs report came out today with disappointing figures. The jobs report, which was delayed more than two weeks because of the government shutdown, showed the economy gained just 148,000 jobs last month. When expectations were around to be 180,000. But the unemployment rate ticked down to 7.2%, the lowest since November 2008.
  • The reason Stocks increased was because due to the weak economic data investors anticipate that the Federal Reserve will continue its monthly stimulus of $85 Billion dollars being pumped into the economy. Investors still feel that the economy isn’t strong enough to stand on its own feet thus they highly depend on the stimulus.
  • Unemployment dropped to 7.2% not due to high employment figures, but due to decreasing labor participating rate. Less and less people are actively looking for jobs because they are discouraged and thus the unemployment dropping to 7.2% because when people aren’t looking for jobs they are no longer counted in the unemployment system. Labor participation is 63.2

Categories: Equity Capital Markets

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