Interview: The market may have a tough time extending gains
the s&p 500 higher for the year and this may be the best investors can hope for. bloomberg’s “taking stock” story looks at how old this rally is and compares it to other rallies in the past. the comparison, not flattering. edgar ortega is here to explain. how exactly do the history books show the market may have a tough time extending gains?
>> there are two data that analysts point to, first, a study done that points out that, looking at prior recoveries from bear market , the market usually tops out around 27 months after we hit bottom in the market and the other data is from s&p, looking at the market ‘s performance since 1942 and point out that usually in the third year, you get an advance of about 3% on average. but really, the data there is mixed and it does point out basically that on the third year, the market usually starts to peak out.
>> we did finish the week, here, with the s&p 500 hitting its highest since july of 2001. the s&p 600 small cap, 400 midcap, new york stock exchange composite and dow transports all at record levels. doesn’t that suggest still some strength in the market ?
>> some investors we talk to suggest that, sure, the market here may be on its―last phases, perhaps, if you want to call it that, it is the longer rally than an average rally for bear markets but the market is still showing signs of strength, suggesting this means that at the very least we’re likely to bounce around in a range if not even extend our gain. other chart watchers, however, point out other signs that the market might be losing strength. they look at the nasdaq’s decline this year, they look at the fact that some of the best performers last year, such as ebay or biogen, have declined of late. these are some signs suggesting perhaps everything is not going full steam ahead.
>> thank you very much. bloomberg news reporter, edgar ortega. up next, gene sperling, president clinton’s former economic adviser. he puts his spin on the better-than-expected jobs report. stay with us.
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>> welcome back to the “world financial report,” i’m michael mckee. the dow jones industrials% finishing up at their highest since august of 2001. friday’s jobs report providing reams of data on the american labor economy. one of the more obscured data series is job leavers. time for our regular look at the “chart of the day,” here’s bloomberg news editor-at-large, tom keene. alan greenspan likes this particular number. you’re not too obscure.
>> i think i probably got it from our distinguished chairman of the federal reserve.% it’s been an exciting day because it’s a mixed report. from lehman brothers, a mixed report, morgan stanley, a mixed report. there’s a lot of ebb and flow here. bank of montreal says the strong employment gain bodes well for above-trend employment growth. that’s a positive trend. 262,000. what’s exciting is when you dig into the data there are positive signs. here is one of the real positive numbers for the day, 40 years of job leavers, people who want to quit their jobs and find something else, going to the greener grass and you can see it’s spiked up here to 11.9%, not near the 1990’s boom, the green rect angle, the joy of the late 1990’s, but certainly a solid recovery in one of those statistics that finally gets us back to before september of 2001.
>> you mentioned this is a mixed report, that some had some concerns. what were they?
>> i think the major concern that i heard from economists today was still the flat wages. i spoke to ray stone of stone and macarthy and he said it’s deceptive. the data used today is 80% of the public that’s production workers. he points out with force, as i just heard from john ryding on your show, that part of america is seeing positive wage growth of the so in today’s data, not grim news but certainly stagnant news on wages, ray stone optimistic that will improve and catch up with what we’re seeing from a smaller but more productive part of the american demographic.
>> 30 seconds left. are we going to see more gig job gains like this in the months to come.
>> i hear from economists that we will see these numbers, they’re optimistic. i don’t hear anybody saying we’ll get back to the 1990’s job boom.
>> thank you very much, tom. bloomberg news editor-at-large, tom keene.
