Stocks jump as Roubini again sees recession’s end
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Dr. Doom keeps sounding like a man who has rediscovered hope, and that was good enough today to give the stock market another lift.
From Bloomberg News:
The U.S. economy may pull out of a recession by the end of the year and a second stimulus package would help broaden the recovery, said Nouriel Roubini, the New York University professor who predicted the financial crisis. “The free fall of the economy has stopped,” Roubini said at a Chilean investors’ conference in New York. “The economy is still contracting but slowly.”
The comments by Roubini, who picked up the Dr. Doom moniker in recent years for his extremely bearish (and accurate) calls on the economy and markets, didn’t appear much different from those he made a week ago. He told Bloomberg on July 9 that the recession would last another six months.
But stock prices began to pull higher today as soon as his latest comments hit the wires at about 10:30 a.m. PDT. The Dow Jones industrial average closed up 95.61 points, or 1.1%, to 8,711.82, the fourth straight advance.
The Dow, up 6.9% this week amid some relatively upbeat corporate forecasts from Intel Corp., American Express Co. and others, now is just 1% below its spring closing high of 8,799 reached June 12.
Broader market indexes today got even closer to their spring peaks. The Standard & Poor’s 500 rose 8.06 points, or 0.9%, to 940.74, leaving it 0.6% below its June 12 closing high of 946.21.
More from Roubini, via Bloomberg:
To help shore up growth, a second [government] spending package may be needed by late 2009 or early 2010 totaling between $200 billion and $250 billion, Roubini said. “We should continue with fiscal stimulus and we might need a second one,” Roubini said. While the worst of the crisis is over, there’s still a “meaningful amount of weakness” in labor markets, industrial production and housing, he said.
Without more stimulus, Roubini expects a “shallow, below-par” recovery that could end up in a “double-dip” recession near the end of 2010.
-- Tom Petruno