Wednesday, December 05, 2007

Goldilocks Rocks; Stock Market Rallies

NEW YORK (AP) -- Wall Street rallied Wednesday after new data showed the U.S. economy is in good shape. Investors were encouraged after the Labor Department reported worker productivity advanced by an annual rate of 6.3% in the summer, the fastest pace in four years (see chart above).

MP: Note also that the 6.3% growth in U.S. worker productivity was 2.5 times the average growth of 2.5% since 1995, and was the fourth highest quarterly growth rate in since 1995.

"The best news for the market is good news on the economy," said Jack Ablin, chief investment officer at Harris Private Bank. "There might be a general malaise among homeowners these days, but as long as more people are getting paychecks then the economy can withstand the stress."

"We've really got to revisit how fast the economy has been slowing down," said James Paulsen, chief investment strategist at Wells Capital Management. The new reports have "reminded us that there are huge portions of the economy enjoying the easing of credit conditions, which hasn't been largely discussed."


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