The Dow Jones Industrial 500 went within 27 points of its all time high yesterday, before ending the day on 11689, 30 points off the record.
Some analysts are predicting the index could pass its all time high mark this week.
It was good news on the US property market that helped yesterday’s rise. The latest data from the US Commerce Department revealed a 4.1 percent rise in new home sales in August, and that annual new home sales were better than market expectations.
The Commerce Department stats contradicted data from The National Association of Realtors released earlier this week which indicated a much less healthy market, with the median price of US homes seeing its biggest annual fall since 1990.
In the US, markets are also celebrating the recent falls in oil, although here again, the signals are mixed. Sure oil has fallen in recent weeks, and yet, ironically yesterday it surged nearly $2 a barrel. Fears that OPEC would reduce oil supply, in order to maintain the current price, were behind the drop.
There was also good news on inflation, but tempered with lingering doubts.
The good news: a Fed official has said he believes US inflation has peaked and is likely to fall. According to Kansas City Federal Reserve President, Thomas A. Hoenig, the interest rate rises already implemented by the Fed are still working. The inference: there’s no need to raise rates again.
But as one official made positive noises, another sounded a warning. Federal Reserve Bank of Richmond President, Jeffrey Lacker, said that he voted for an interest rise, when the Fed met last week.
It’s been a rough few years for the Dow Jones. What with the dot com crash, 9/11, Enron, the US recession, it’s no surprise the market collapsed so dramatically earlier this decade.
And yet, with fears that the US could hit recession next year not gone altogether, it’s perhaps a little surprising that Uncle Sam’s most high profile index should be putting on such a startling performance.
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