Three big reasons to be bullish
Though the economy is not out of the woods, improvement in retail, housing and corporate dividends are encouraging signs
Some investors have already made up their mind the stock market rally is over. Others are convinced there’s nowhere to go but up. Both views are over-simplified market predictions considering the complicated economic environment.
- Complete coverage: Seven reasons the bull market will charge on
A closer look at the latest stock market news proves that
while things aren’t all coming up roses on Wall Street, there are plenty of
reasons to be cautiously optimistic the bull market will continue. Here’s a
brief look at three of the latest reasons from the last few days that indicate
the market should continue its run:
1. Retailers Report Strong Sales for March
Warmer weather thawed consumers spending freeze in March as retailers posted strong sales on the month. Today, we learned that big box store Target (TGT), department store Macy’s (M), trendy clothing retailers The Gap (GPS) and Limited Brands (LTD)
An improving job market and an early Easter sent shoppers to the mall in
force this march. It’s worth noting that March 2009 was perhaps the worst month
of the whole recession when the market bottomed out at a 12-year low. But easy
comparisons aside, the strength in retail is certainly a sign of improvements
in consumer spending.
2. Housing Sales Stabilizing in Vegas
A recent report shows that signs of life are emerging in some of the hardest hit housing markets. For instance, March sales in Las Vegas rose 33% over February and prices saw a slight boost. Compared to last year, sales were up almost 7%.
Granted, Vegas still has a long
way to go considering it was the foreclosure capital of America after the housing bubble
burst. Some figures estimate that a whopping 1 in 20 mortgages are in risk of
default in the desert tourist town. Still, signs of life in the worst housing
markets are just as important as finding a few regions that are already back on
their feet. This is an encouraging trend if it keeps up.
3. Dividend Stocks Pay Out Big in Q1
After a lean 2009 where profits many corporations are sending cash back to shareholders via dividends. In fact, a rash of dividend increases the first quarter of 2010 boasted an additional $6.4 billion in payouts. That includes old favorites like Pepsi (PEP) but also companies like Starbucks (SBUX), which just declared its first quarterly dividend ever.
That’s quite a turnaround, considering a record 367 companies slashed dividends during Q1 in 2009. But in the first-quarter of 2010, only 48 companies decreased their dividend payments.
You can expect the dividend party to continue as the year goes on. Honeywell (HON) should announce a dividend increase at its shareholder meeting later this month. The fact that stocks are spending cash on their shareholders instead of hunkering down for another disaster is certainly a cheerful sign.
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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