Editor's note: Marc Leavy,CFP® is a regular financial columnist for Business Reform Magazine, the leading Christian business magazine with over 100,000 readers. Each issue features practical advice on operating successfully in business while glorifying God.
The indices have been moving in a sideways direction for weeks now. Much of that is typical summer inactivity and an absence of any market shaking good news. Trading ranges are normal and not to be feared but rather patiently endured. It is all “consolidation” for the next move up.
The market has received good news lately in the form of lowering unemployment, and economic growth, but much of that news was factored into the previous rally. Investors seem to be asking, “What have you done for me lately?”
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The markets have bounced between 9000 to 9300 for the last two months but this has been on light volume without a definitive number of advancers or decliners. Thankfully, 9000 has proven to be a sound support level. There must be a catalyst to punch through 9300 and that may be something as simple as Wall Street returning from vacation.
Productivity has been a two edged sword. Worker productivity has been rising quite steadily and is currently the highest it’s been in decades. The Labor department stated productivity grew at 5.7 percent annually, more than twice the rate of the first quarter.
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The bad news is companies are so productive they don’t need to hire anyone. The good news is that productivity may increase profitability leading to expansion, capital spending, and employment. How this plays out is yet to be seen. However, businesses have been productive for so long that it seems likely that the economy will heat up enough to generate jobs.
Growth stocks should continue to lead the market and biotechnology in particular may remain a shining star. Financials and utilities could be good sectors from here. Since we didn’t get to drill ANWAR, hopefully we can get some Alaskan natural gas to stave off any gas disaster.
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I am seeing more building in my area. Two shopping malls are under major construction. I would be interested in any anecdotal evidence of recovery you may have to share.
Marc Leavy, CFP® is a Certified Financial Planner. Principled Investing teaches Solomon's principles of investing and offers wisdom regarding comprehensive financial planning for a fee. You may contact Marc at [email protected] or visit www.principledinvesting.org.
