Economic slowdown still prevalent

It’s the perfect storm, a trifecta that knocks out bettors everywhere. Even in the midst of an economic recovery of sorts, indicators of slower than expected recovery continue to loom large. Manufacturing is still slow to pick up, the jobless aren’t pounding the streets a whole lot less than they were during the worst of the recession and consequently investor confidence too is sagging.

This is shown in the way stock value has dipped lower than might have been anticipated by doyens of the industry. The Dow Jones has tumbled 144 points (a loss of 1.4% across the board), and the S&P 500 slid by 19 points, still a loss of 1.7% on previous day’s trading. Nasdaq too wasn’t much different, taking a beating of 37 points, again a mystifying 1.7% lower than the previous day’s close.

It seemed as if stocks were recovering after two straight days of posting gains and this came on the back of solid earnings projected by such retail titans as Wal-Mart and Target. But even as the rally went on, traders held firmly on to their coattails and caution given lingering doubts about a double dip recession, and the only thing that sounds nice is the name given to this phenomenon. At the very least, traders are expecting the road back to be slow and so are holding on to their money as tightly as they possibly can.

All the weekly unemployed numbers and poor manufacturing figures only served to fan the flames of this overriding pessimism and it seems as if it will be some time yet before investors manage to put their money where their mouth is. Recent reports indicate that manufacturing in key regions such as Philadelphia are down to a 13 month low, and many onlookers are taking this as a sign that the worst of the recession is yet not behind us, leading to a double dip recession as experts are calling it. It is the same for HP that, despite beating their previous years sales and earning figures, still managed to lose worth during trading hours and after-hours.

Europe and Britain have felt the ripple of this with European stocks and the FTSE 100 slipping up by 1.7%, while the DAX in Germany and the CAC 40 too nipped lower by 1.8 and 2% respectively. Surprisingly Asia was immune to this as the Nikkei and the Shaghai Composite rose as did the Hang Seng in Hong Kong. Market breadth might be negative in the western world, but not all hope is lost as Asia has shown. In time, confidence and stock valuation should rebound.