Everybody feels bad -- so why are stocks and consumer spending up?
Are many investors and consumers just plain tired of feeling lousy?
That could help explain the stock market's October surge -- and the resilience of Americans' spending in the face of sinking consumer confidence.
Despite the market's gut-wrenching swings of the last few months, the Dow Jones industrial average, the Standard & Poor's 500 index and the Nasdaq composite all now are positive year to date. That sets the scene for November and December, which historically are stocks' strongest two-month period of the year.
From my weekend column in the Times:
Crisis fatigue may be setting in.
To put it another way, financial markets and many consumers may just be getting tired of feeling bad after three months of severe emotional stress.
European leaders on Thursday unveiled their latest plan to end the 2-year-old debt crisis that has threatened another global banking meltdown. Though long on hope and woefully short on details -- for example, how exactly the $600-billion Eurozone rescue fund will be beefed up to a promised $1.4 trillion -- the plan sent stock markets worldwide rocketing Thursday.
Equity investors had more to take to the bank Thursday than just European promises. Wall Street bulls had been arguing for months that the U.S. economy wasn't falling off a cliff, despite the market's insane volatility. Confirmation of the non-recession came in the government's report that the economy grew at a 2.5% real annualized rate in the third quarter, the fastest pace in a year.
And here's the clincher: Americans' personal spending rose at a 2.4% annualized rate during the quarter, rebounding from a 0.7% pace in the second quarter -- even as consumer confidence continued to crash.
Read the full column here.
-- Tom Petruno