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Posted by Deb | Guest Post | Wednesday 11 May 2011 12:21 am

(A guest post)

Stocks Go Higher as Dollar Declines

There’s been a lot of bad news for people recently, with tsunamis in Japan and the United States gross domestic product (GDP) performing poorly last month. It’s hard for anyone to score a decent pay day, but apparently the slate of bad news does not seem to be affecting the stock market as much as Bernanke’s policies. Investors in the stock market are pushing the Dow Jones to fresh multi-year heights, despite all the bad news.

Dollar Declines

Where you see some of the real impact of the bad news is in the dropping value of the dollar. New jobless claims that rose and poor GDP performance has some people favoring other currencies versus the dollar. However, there is still some good news for people who are pinning their hopes on an economic recovery: March showed a 5.1 percent increase in pending home sales. For this sluggish economy that has seen the house market in the toilet for years, that’s very welcome news.

Companies Sitting on Cash Holdings

With stock prices going up, there are plenty of companies sitting on large reserves of cash that they can use now to spur economic growth. Even with the decline in the value of the dollar, once the economic engine is flushed with money, it will be only a little bit of time before more good news follows. While it can seem odd to have poor economic indicators ignored by stock market investors while the dollar declines in value, it’s probably because overall the economic picture for the United States is improving. Even with higher gas prices, more people are getting jobs, fewer people are in default of loans, and the stock market continues to be strong. Even the Japanese tsunami can have a silver lining for American car companies that will have a larger share of the worldwide market for small cars as Japan struggles to maintain production.

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1 Comment »

  1. Comment by Mark Alexander — May 11, 2011 @ 9:31 am

    This is not for long time, very soon it will be cover up.

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