The U.S Economy Grows More In The 3rd Quarter 2012 But Wall Street Plays It Cool:
The U.S. economy is slowly getting better. After growing at 1.3 percent in the second quarter of 2012, the economy grew faster from July to September. The Commerce Department said today GDP grew at 2 percent in the third quarter. The growth level is still slower then the average 3 percent or more for the economy to be in expansionary mode but after 43 consecutive weeks of high unemployment above 8 percent, it’s clear the U.S. is bouncing back albeit slowly.
The news about the economy didn’t help equities too much as early gains in the stock market faded quickly after the open. The S&P 500 fell by 1.03 or 0.07% to 1,477 while the NASDAQ ended the day at 2,987.95 up roughly 2 points. The bears were in control for most of the day but this could be a buying opportunity for long term holders with Apple selling at a pre-holiday season low. If the election polling data remains close, this could be the last week to buy stocks at a discount before the presidential election and money-flow to the bond market hasn’t been significant.
Market participants could be rotating sectors and money managers still haven’t caught up to the major averages which will keep them behind for the year if the election result decreases uncertainty, making equities a better investment. Price to earnings multiples are still historically low on average when bonds are yielding less than 2 percent. This keeps us bullish long term.