Tuesday, May 26, 2009

Consumer Confidence Surge in May

The Conference Board's Consumer Confidence surged to 54.9 from 40.8 last month. Economists surveyed by Thomson Reuters were expecting 42.3. The May number is the highest in more than 6 months.

The market opened in negative territory after the news of North Korea's nuke and missle tests. However, the market reacted immediately on the release of the consumer confidence number, with Dow Jones Industrial Average jumping 60 points in a split second. (That was awesome to watch on an intraday chart.) Currently (8:40am PST), DJI is up 162 points (1.9%) at 8,440, S&P 500 up 17 points (1.9%) at 904. Nasdaq is outperforming the two, up 45 points (2.6%) at 1,737.

Consumer discretionary sector is trading very strong. The rationale is that if consumers are more confident they will spend more on clothes (Macy's up, so is Men's Warehouse, which I recently featured in my other blog), iphones (Apple is up, see my post), buy houses (homebuilders are all up huge despite an abismal house price index reading).

The improving stock market, and extensive media coverage on "Let's spot a 'green shoot'!" must have worked wonders. It's all about psychology now, until it isn't.


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