Download What Makes the Market Move

What Makes the Markets Move?
Economic indicators, anxieties, opinions – and even glitches.
What makes the stock market go up and down? Current events, economic indicators,
newsworthy remarks, and last week, even a faulty network server.
Indicators. There are 7 categories of economic indicators: total output, income and
spending (including the GDP, consumer spending, and corporate profits), production and
business activity (housing starts, manufacturing, durable goods orders, oil/gas
inventories), unemployment, employment and wages (the jobless rate and level of
civilian employment), consumer prices (the CPI and wholesale prices), the money, credit
and security markets (interest rates, consumer credit, the money supply, Wall Street
itself), federal finance (taxes, budget, the federal deficit) and international trade (imports
& exports). Monthly or quarterly, the federal government issues updates on these
indicators, and even the slightest sign of growth or contraction can affect the markets.
Current events. Civil wars, regional trade agreements, natural and manmade disasters
and sociopolitical unrest can directly affect your investments. So can the performance of
foreign markets. Last week’s correction began when China’s Shanghai Composite Index
fell 8.8%, its biggest one-day drop in a decade. Then Europe’s major indexes lost 2-3%.
A suicide bomber attack on the U.S. military base in Afghanistan, where Vice President
Dick Cheney was visiting, added a bit more anxiety.
Opinion. A former Federal Reserve Chairman (Alan Greenspan) says a recession is
“possible” (Feb. 27) and then adds “I don’t think it’s probable” (March 1). Current Fed
Chairman (Ben Bernanke) sees “really no material change in our expectations for the
U.S. economy” (Feb. 28). Each remark affects the pulse of the markets.
Aberration. At 2:58pm EST last Tuesday, the Dow Jones Industrial Average suddenly
fell 178 points in one minute. Most marketwatchers sensed a computer glitch instead of
panic, and their hunch was correct: remarkably heavy trading had caused a key
computer calculating the real-time average of the Dow to lag and malfunction, resulting
in price tabulation errors and delays in reported trading prices.
Quote of the week. “Beware the fury of a patient man.” – John Dryden
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These views are those of Peter Montoya Inc. and should not be construed as investment advice. All information is believed to be from
reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance is historical
and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices.
Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as
currency fluctuations, political and economic instability and differences in accounting standards.
This information is provided by Jack Brkich III, CFP, a registered representative of securities and advisory services,
offered through Cetera Advisors LLC (doing insurance business in CA as CFGAN Insurance Agency), member
FINRA, SIPC. Cetera is under separate ownership from any other named entity.
Jack can be reached by phone at (949) 251-3544 or by email at: [email protected].
Branch office address: 43 Corporate Park, Suite 104, Irvine, California 92606.
© 2007 Peter Montoya Inc. Reprinted with Permission. All other rights Reserved.