This story originally appeared on qortuba
The stock market is on pace to set another record this week, and that’s not even factoring in the fact that the Federal Reserve is set to release new minutes from its September meeting today. The Dow Jones Industrial Average and S&P 500 have been setting new highs on a near-weekly basis, and there’s a chance that the record books may have to be rewritten yet again before the year is out. What’s happening in the stock market? Let’s take a look.
The Dow Jones Sets Another Record
The Dow Jones today has now set new all-time highs on a near-weekly basis over the past three months. The last time the blue-chip index was stuck in a similar pattern was back in 2012, when it also set new records nearly every week for the final six weeks of the year.
The Dow today reached nearly 1,600 points YTD, or nearly 17%. That’s led many to wonder if the Dow may set yet another record before the year is out. The record-setting pace of gains come at a time when the U.S. economy is still struggling to get on track. The unemployment rate is still high, and the economy hasn’t been able to grow at a strong enough clip to create many new jobs.
Is the Stock Market Correlated to the Economy?
Many people believe that stock market performance can help predict how the economy will perform in the future. It’s not a completely accurate indicator, but it does have some relationship to the overall health of the economy. When the stock market is booming, it’s often because investors think that overall economic conditions are good.
If the stock market is falling, then it’s often a sign that economic conditions are getting worse. There are also a variety of other factors that can affect stock market performance, and they don’t necessarily have anything to do with the overall health of the economy. These include political issues and changes in interest rates.
Why is the Stock Market Up?
Over the past few years, the stock market has had repeated surges that send it racing higher. In January 2016, the market had its biggest single-day percentage gain in history. It surged more than 1,000 points that day, and for weeks after it was called the “Trump Rally.”
The market has also been climbing on a weekly basis since the spring. Back in May, the S&P 500 set a new high for the 55th consecutive session. It’s been climbing steadily ever since, and there seems to be no end in sight. It’s worth noting that the Dow hasn’t actually reached a new all-time high since January, indeed the Dow Jones today trades at $34,548 in January the Dow was trading at $36,231.
What’s Happening in the Eurozone?
The European Central Bank is expected to announce the results of its latest stress tests today. The tests are designed to make sure that the European banking system can handle a major economic downturn. If the tests show that banks are in good shape, then the ECB may decide to keep its benchmark interest rate at zero.
The ECB is also expected to announce its quarterly financial audits of individual banks. The audits are supposed to make sure that each of the banks is in good shape, and they’re closely watched by investors. Investors will be watching the banking audits for signs that the banks are in trouble.
What’s Happening in Japan?
Japan is still struggling to recover from a massive earthquake and tsunami back in 2011. The Japanese government has announced plans to increase spending and cut taxes, a characteristic response to the post-Earthquake Blues. Japan’s economy is expected to grow at a snail’s pace over the next few years, and that’s not expected to help boost investor confidence.
The stock market has soared since the middle of last year, and it seems like there’s no end in sight. The growth rate is high, and there’s little reason to believe that it will slow down soon. Investors should keep in mind that the stock market is not a good indicator of economic conditions. With so many other factors that can affect the overall health of the market many investors look at the Dow Jones stability as the best stocks to buy now.