American Stock Market Hits Another All Time High
Just a day after recording a new high, the Dow Jones index hit another high, breaching the 13,900 level for the first time ever. Even though there are signs that the US economy is on the verge of a downturn, it seems that investors cannot get enough of the markets. Despite news that US retail sales in June had fallen an unexpected 0.9%, the rise goes on and on - dragging along other markets around the world. So what next?
Unfortunately, there are many similarities with the 1987 crash with US investors again showing a high risk attitude towards investment risk, chasing markets which have been buoyed by takeover speculation and over exuberance. The US economy is also showing signs of slowing down, with many people forecasting an imminent collapse of the housing market.
We have also seen average savings reduced to a level not seen for many years, with many consumers investing in both property and the stock market. The recent rise in interest rates has not had a major impact as yet and the authorities are under pressure to take a firmer approach. The level of personal debt in the US is also rising, as are the amount of people unable to finance current debt levels.
If you take a step back and consider the bare facts, the US economy is not in as good a condition as many would have you believe. It may just take one major knock to the financial sector - which may come in the form of more troubles in the sub prime lending sector - to give a sharp reality check, and then watch how investors react.
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