The last couple of months have been very good for the stock market, especially the Dow Jones Industrial Average (DJIA), which broke its index record set in the year 2000 and went on over the value of 12,000 points, hitting new record highs on a regular basis.
The DJIA's blue chips are among the stocks pulling the market up, as it has been closing at new all time highs for most of the time in January 2007. Another factor contributing to the rise in stock prices is the very good performance of the financial sector. Examples would be, among other, companies such as JP Morgan, achieving a whooping 68% rise in net income in Q4, comparing with Q4 2005 (More on that: http://online.wsj.com/article/SB116903511859878854.html?mod=home_whats_news_us ), or Merrill Lynch, taking advantage of the strength of the financial marketing in the concluding months of 2006 (More details on this story: http://online.wsj.com/public/resources/documents/info-earn06q4.html ).
The worries about the rising inflation have offset the strong performance of the sector (Details: http://biz.yahoo.com/ap/070117/wall_street.html?.v=33 ). The Tech sector's fall also contributed to what is shaping up to be a pretty weak day on the security markets.
The above concerns do not change the big picture though. Falling oil prices should loosen up the inflation pressure, and the Fed officials feel than can handle inflation and bring it down. Meanwhile, as the MarketBeat blog is stating, the predictions for the global economy are getting more positive (http://blogs.wsj.com/marketbeat/2007/01/17/the-future-looks-bright/ ). The US economy seems to be entering 2007 in good condition, quote: "Most reports ... indicated that economic activity expanded at a moderate pace," the Federal Reserve said (From: http://biz.yahoo.com/ap/070117/fed_economy.html?.v=8 ).
To sum up, it seems that despite some minor problems, the intermediate outlook for the economy looks promising. The question is, how is the market going to incorporate those news.
The DJIA's blue chips are among the stocks pulling the market up, as it has been closing at new all time highs for most of the time in January 2007. Another factor contributing to the rise in stock prices is the very good performance of the financial sector. Examples would be, among other, companies such as JP Morgan, achieving a whooping 68% rise in net income in Q4, comparing with Q4 2005 (More on that: http://online.wsj.com/article/SB116903511859878854.html?mod=home_whats_news_us ), or Merrill Lynch, taking advantage of the strength of the financial marketing in the concluding months of 2006 (More details on this story: http://online.wsj.com/public/resources/documents/info-earn06q4.html ).
The worries about the rising inflation have offset the strong performance of the sector (Details: http://biz.yahoo.com/ap/070117/wall_street.html?.v=33 ). The Tech sector's fall also contributed to what is shaping up to be a pretty weak day on the security markets.
The above concerns do not change the big picture though. Falling oil prices should loosen up the inflation pressure, and the Fed officials feel than can handle inflation and bring it down. Meanwhile, as the MarketBeat blog is stating, the predictions for the global economy are getting more positive (http://blogs.wsj.com/marketbeat/2007/01/17/the-future-looks-bright/ ). The US economy seems to be entering 2007 in good condition, quote: "Most reports ... indicated that economic activity expanded at a moderate pace," the Federal Reserve said (From: http://biz.yahoo.com/ap/070117/fed_economy.html?.v=8 ).
To sum up, it seems that despite some minor problems, the intermediate outlook for the economy looks promising. The question is, how is the market going to incorporate those news.
