Dow and S&P 500 Get Good News from the Economy
The Dow Jones Industrial Average (DIA) and the S&P 500 (SPY) have opened higher today. Though some pessimists have long been forecasting a market crash, US economic data has given them a hard time this week.
Today, October’s non-farm payroll data came out, shattering expectations. US third-quarter GDP growth was also way above expectations.
Dow Jones and S&P 500
The Dow Jones Industrial Average and the S&P 500 have opened higher today. The data released showed that the US economy added more jobs than expected last month. Despite General Motors’ (GM) strike, the US economy added a healthy 128,000 new jobs last month. To add to bears’ woes, the Bureau of Labor Statistics upwardly revised the non-farm payroll data for August and September. In the first ten months of 2019, non-farm payrolls averaged 167,000 per month. While this is down from 223,000 in the corresponding period last year, it’s still quite strong.
Strong US economic growth
A healthy US job market is among the reasons behind the consumer sector’s strength. Notably, data released earlier this year showed that the US economy expanded 1.9% in the third quarter—far above what economists were expecting. The US economy surprised on the upside in the first and second quarters as well.
Both the Dow Jones Index and the S&P 500 Index are up handsomely this year. While some perma-bears have been forecasting a market crash, so far, US markets have denied them any meaningful victory. Barring periods of sell-offs around the trade war’s escalation, both the S&P 500 and the Dow Jones have shown strength. The Federal Reserve’s rate cuts have also helped propel bullish sentiments in the markets.
Watch out for PMI
The ISM manufacturing PMI (purchasing managers’ index) is expected to be released later today. While the US economy has been resilient thanks to US consumers’ spending appetite, the manufacturing sector has weakened. September’s ISM PMI release triggered a sell-off in the S&P 500 as well as the Dow Jones. Meanwhile, China’s October manufacturing PMI, which was released earlier in the day, was better than expected. Can the US manufacturing PMI also surprise on the upside? We’ll find out soon.
Meanwhile, a bullish strategist sees another 10% upside in the S&P 500. Read Forget the S&P 500 Crashing, Strategist Sees New Highs for more analysis.