Image: Flickr
Image: Flickr

All is good, at least that is the impression you might get if you look at the fortunes of the US stock market, but then if you hear the rationale put forward to explain the latest jump, you might be left scratching your head, or maybe even tearing at it.

 

The S&P 500 has hit a new all-time high, closing at 2,488, up one per cent on the day before. To put this in context, the index was standing at 2,159 a year ago, 1,460 five years ago. If only you had bought shares tracking the index in 2012, you would be sitting on a healthy profit.

But this all begs the question, why?

There is a good and bad side to the US economy – the US consumer Confidence Index went within whisker of hitting a new 16-year high in August.  US unemployment was just 4.4 per cent in August, and in Q2 annualised growth was 3.3 per cent. These are good numbers.

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But then again, there have been a few problems of late – like the second worst hurricane ever recorded, and a possible conflict with North Korea.

So, what reason was given for the latest rise in US stocks?

Well, the first good piece of news is that North Korea hasn’t tested any hydrogen bombs for several days – no seriously, markets reacted with relief to the news that North Korea was quiet this weekend.

And then there is hurricane Irma, which caused less damage in Florida than had been feared.

No one can say for sure that the recent severity of the hurricanes has been down to climate change, but there has to be a good chance it is.

No one can say for sure how the situation in North Korea will turn out, but some kind of military conflict involving nuclear weapons cannot be ruled out.

And the S&P 500 hits a new all-time high.