Bringing cheer to investors and businessmen, the stock market finished its best week in almost three years last week closing with a 7.4% gain in the Standard and Poor’s 500 Index.
Good News for Investors
This was the markets biggest gain since March 2009, fueled by good news about the US unemployment rate drop, which was a surprise to most economists.
The Dow Jones Industrial average ended the week up by 7%, the largest weekly gain since July 2009.
Before the market opened on Friday the Labor Department reported that the unemployment rate dropped down to 8.6%, its lowest number in 2 ½ years. Economists were expecting the unemployment rate to remain at 9%, but the drop is misleading; the real reason that unemployment dropped is not because more people are working, but because over 300,000 people without jobs have stopped looking for jobs. If they are no longer looking for work, then they are not counted as unemployed.
Peter Cardillo, chief market economist at Rockwell Global Capital offered an explanation for the improved behavior of the stock market:
“This market has been gripped with fear for a long time,” he said. “And I think some of these fear factors are beginning to dissipate.”