Prices fell at the start, but then recovered and ended with gains for the day, as the three averages reversed some of their losses of the day before. The NASDAQ rose .62 percent and the S&P500 moved up .44 percent; the DJIA, at plus .09 percent, managed to stay in positive territory.
Adding yesterdays action to this mix results in a +1/-1 pattern, a configuration seen just 66 times since 1950, 16 of which occurred in this century. Results on the day following, in the past, divided almost equally, with 9 gains and 7 declines for the DJIA and the S&P500; the NASDAQ scored 10 gains against six declines.
The projection for today, based on the history of yesterdays pattern, came out consistent with its large plurality of gains over losses.
Many negative and pessimistic comments on the Feds intended $600 billion purchase of existing Treasury bonds focus on the resulting increase of the money supply and fears of inflation. Yet rising prices would help the economy – these would enhance profits, and lead to increases in production. That situation, in turn, requires more labor input, meaning an increase in employment and a decline in unemployment.
Modest advances in prices enhance the business climate and encourage production and consumer purchases. (Just imagine the impact of rising prices on the paralyzed housing market.) Moreover, the output and income lost from unemployment cannot be regained — ever. Putting our underutilized resources back to production will increase societys well being without incurring any real cost to the nation.
DJIA .09 percent
NASDAQ .62 percent
S&P500 .44 percent