Stock Market: Summer 2013 - Consumers In The Drivers Seat

(Drivebycuriosity) - Last week the U.S. stock market climbed on a new all-time high. If we believe the media the ongoing rally is just a response to Federal Reserve chairman Bernanke´s promise, that interest rates will stay extremely low for the coming months. But there are more drivers. Besides the supportive monetary policy, there are two more strong tailwinds: Rising company profits (the earning report season for Q2 has started) and the steady growth of the consumer spending.

Last Thursday many U.S. retailers reported their sales numbers from June. Same-store sales at shops open at least a year — a measure that strips out the volatility of openings and closings — rose 4.1% last month from the same period a year earlier (latimes). This was biggest increase since January and better than economists had expected.

This news was widely ignored by the media but the numbers show that the consumer spending, the engine of the economy, is still is fueling the upswing. U.S. consumers are staying optimistic. They ignore the doom & gloom in the media, encouraged by the healing job market, the comeback of the home prices and the rally on the stock market. The rising consumer spending will feed the continuation of the economic upswing and fuel further rising company profits and the extension of the stock market rally - generating a virtuous circle.