Consumer Confidence To Drive
The Stock Market Higher!

by Ian Harvey

September 27, 2018

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Consumer confidence is one of the more likely major factors that will push the stock market to all-time highs! With the job growth being so healthy, backed-up by a strong economic outlook, American consumers appear to be most confident since 2000.

According to the Conference Board, a business research organization, U.S. consumer confidence has soared to its highest this month. The consumer confidence index had climbed to 138.4 this month from an upwardly revised 134.7 in August. This means, the key economic indicator that measures attitudes on future economic prospects, registered its best reading since September 2000 and is not too far from the all-time high of 144.7 reached that year.

The Conference Board's survey ran parallel to that of the latest University of Michigan's consumer sentiment report for the month of September. The preliminary report showed that the consumer sentiment index came in at 100.8, the second-highest level since 2004.

Why the Consumer Optimism?

The robust job growth and strength in the overall economy are the key factors behind this consumer confidence. The U.S. economy has been able to produce an average of 207,000 new jobs per month so far this year; and the current unemployment rate is now at a nearly two-decade low, while the U.S. economy added jobs for 95 successive months in August, the longest stretch on record.

The Trump administration's annual growth target of 3% is on track according to the Conference Board's Leading Economic Index which indicated a 3% or more growth rate in GDP in the final two quarters of the year.

The Commerce Department has stated that the economy has already expanded at a seasonally adjusted rate of 4.2% in the April-June quarter. And, Gross domestic income (GDI), an alternative measure of economic growth, has also increased at a 1.8% annualized rate in the second quarter.

Backing of the Fed Hike!

The Federal Reserve raised interest rates, as expected, by a quarter point, raised its economic outlook for this year and next, and removed the reference in its statement that policy is 'accommodative.' These actions initially sent stocks and bonds higher.

In their forecast, Fed officials collectively estimated GDP would rise 3.1 percent this year, up from a previous forecast of 2.8 percent. For 2019, they expect 2.5 percent, up 0.1 percentage point. But the Fed held its longer term expectation of growth steady at 1.8 percent.

Moving past the fallout after Federal Reserve Board Chairman Jerome Powell told reporters during the post-meeting briefing that the removal of the term didn't indicate any change in the path of rate hikes; the economic outlook is still going strong and will add more fuel to this current bull rally!

Conclusion…..

So, with basically only a few days left in calendar Q3 2018, it is obvious that there is a commanding performance from stock market bulls - pushing to all-time record highs on both the Dow 30 and S&P 500 indexes.

The positive sentiment is so apparent, it's abundantly clear that bull-market spirits are not dying of old age; and with close to 10 years on of bullish trading, there is not really even much slowing the stock market down.

Many market watchers are pushing for the S&P closing above its high, and pushing its way up to 3,000 in the fourth quarter.

Take advantage of what the market has to offer today.

Stock Options Made Easy memberships are here to help you ride the wave higher and profit from the rising market!


Best of Trading,
Ian Harvey
Director of Stock Options Made Easy


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