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Investing Specialists

Back-to-School, Back-to-Work Drive Positive Economic Surprises

The economic news was uniformly positive this week and even included some respectable news from the battered manufacturing sector.

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The S&P gained over 1% this week on a series of positive economic surprises in the U.S. and a lack of negative news out of Europe and China, tempered by fears concerning the upcoming earnings season.  Alcoa (AA) is expected to release earnings next Thursday. Third-quarter earnings for the S&P 500 are expected to be down 2% or 3% from a year ago, the first decline of the recovery.

The economic news was uniformly positive this week and even included some respectable news from the battered manufacturing sector. Home price gains continued in September (according to  CoreLogic (CLGX)), the employment report was good (the details were even better than the headline numbers), and the auto industry had a surprisingly good month. Same-store retail sales were OK and generally in line with expectations, but were not as strong as most of the other reports this week. In general, economic activity seems to have picked up a little after a slow August. Consumers are continuing to spend, but businesses continue to hold spending reins tightly, perhaps too tightly, given a stronger consumer.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.