Leading Indicators
| Leading Technology | Description | What Good News Mean / What is good news | What Bad News Mean | Time Data Released |
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Reflects how consumers feel about their personal economic situation and expectations for the future | May mean an increasing market. If confidence rises, consumers are more optimistic and likely to spend, especially on big-ticket items. This translates into higher corporate profits. | May mean a decreasing Market. When confidence falls, consumers are more likely to scrimp then spend, sending stocks down in anticipation of lower profits. | Middle and end of each month. |
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Consumer Price Index
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Tells whether the prices of everyday goods and services are rising or falling | May mean an increasing market. When the CPI falls slightly or remains unchanged, consumers will likely be willing to spend more on nonessentials such as entertainment and travel, a positive sign for stocks. | May mean a decreasing Market. If index goes up by .3% to.4% for 3 straight months, consumers will likely spend less. A rising index also foreshadows inflation, causing the Fed to raise short-term interest rates. | Middle of each month |
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Crude Oil
Price Index
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Shows whether consumers and industries will have to pay more for fuel. | May mean an increasing market. A drop in prices at the pump puts more money in consumer's pockets. Though stocks usually rise, oil stocks fall as lower prices depress profits. | May mean a decreasing market. When crude increases ( or exceeds $35 a barrel ) fears about inflation and cash strapped consumers depress stocks. Hard hit will be airlines and trucking. | Fluctuates throughout the day. |
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Employment Report
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Indicates the rate at which U.S. companies are hiring new employees | May mean an increasing market. When it's reported that the unemployment rate is falling and that the previous month saw 200,000 or more new hires, consumers feel secure about their jobs and spend more. | May mean a decreasing market. If the number shows less than 100,000 new hires in the previous month and unemployment is rising, consumers become uncertain about their job security and cut spending, sending stocks down. | First Friday of each month |
| Housing Starts | Reflects the number of new homes being built. | May mean an increasing market. If housing starts rise at least 5%, it signals that a wide-ranging spending spree has begun. Building materials, furnishings and many other home-related goods are purchased. | May mean a decreasing market. When housing starts begin to fall, it can be a sign that consumer confidence has ebbed. Many industries may begin to cut back in advance of slower consumer spending, sending stocks. | Middle of each month |
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Producer Price Data
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Shows whether companies are paying wholesalers more for goods for the goods they will turn around and sell to consumers or less. | May mean an increasing market. When these numbers fall or remain flat, companies are paying the same or less for things they sell, enabling them to hold down prices, sell more goods and boost profits. | May mean a decreasing market. A jump in price data means companies must choose between absorbing the loss or passing higher prices along. Either way, profits will be lower, sending stocks down. | A few days before the CPI is released |
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Purchasing Managers Data
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Reflects the rate of spending by U.S. companies on equipment, employees, and other operating must haves. | May mean an increasing market. A rising rate signals business are investing more in growth, reflecting optimism in future profits. Expect shares of companies making basic goods to rise. | May mean a decreasing market. When the rate drops, companies are spending less on growth, reflecting a cautious outlook. Diminished corporate confidence translates into lower profits. | First and third business day of each month |
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Retail Sales
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Charts consumer spending at brick-and-mortar and on-line stores | May mean an increasing market. An upturn indicates consumer confidence. Stocks of big retailers, price clubs and on-line stores will likely jump. | May mean a decreasing market. A decline indicates consumers aren't upbeat about the economy. A persistent decline will depress retailers' stock. | Middle of each month |
| Short-term Interest Rates | Set by the Federal Reserve, these rates dictate what banks charge each other to borrow money. | May mean an increasing market. When the Fed cuts short-term rates, longer-term rates tend to fall. As they do, stocks become more attractive than bonds and dept becomes less expensive. | May mean a decreasing market. If the Fed hikes short-term rates, longer-term rates often follow. Bonds become more attractive than stocks. Borrowing cost more, and spending declines | The Fed meets eight times a year to decide on short-term rates. |
| GATT Rate |
From Jeremy Siegel, professor of finance, Wharton School of Management.