Market Recap (Dec. 5)

The Dow Jones Industrial Average (DJIA) finished the week up 7% despite a late downturn as the market closed on Friday. This marks the second biggest weekly gain in the index’s history. The S&P 500 and the Nasdaq Composite finished the week up 7.4% and 7.6% respectively. Investors responded positively to reports early in the week that unemployment had fallen to 8.6% and that 120,000 nonfarm jobs were created in the month of November. This is a broad indicator that the US’ ailing economy is improving, but analysts are quick to caution that we are not out of the woods yet.

There are still major concerns looming over the European debt crisis and although domestic manufacturing is on the rise, the interdependencies in world economies could create serious problems as Europe slides into a recession. The leaders of the 17-nation Euro zone will meet for a summit on Thursday and Friday of this upcoming week and investors will continue to follow measures to ease the debt crisis closely.

The European Central Bank (ECB) recently pledged 200 billion euros to the International Monetary Fund to be used in alleviating the fiscal woes of countries such as Italy, Greece, and Spain. Oil finished the week at over $100/barrel and energy stocks performed extremely well on the whole. This sector is awaiting a final decision on a proposal from TransCanada (TRP) to build a pipeline from Canada to the Gulf of Mexico. While the Obama administration has initially rejected the idea over concerns about safety and the environmental impact the pipeline may have, House Republicans have introduced a bill to legislatively force approval. Proponents of the project say the pipeline would create 20,000 jobs and release problematic oil gluts in places like Cushing, OK.

Financial stocks posted huge gains as three out of four companies listed on the DJIA ended with positive numbers for the week. European banks benefited from Angela Merkel’s comments early in the week on plans to reach a tighter fiscal union in the EU. American bank shares responded well to the positive labor reports but, like every other sector of the economy, are still extremely vulnerable to economic unrest in Europe.
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Editorial Staff