Thursday, May 22, 2008

Low consumer confidence in US and record high oil prices.What you should do?

American consumers' confidence slid further in the latest week, as escalating gasoline prices and the weakening economy drove the measure near its historical low, a report showed on Tuesday. The ABC News/Washington Post Consumer Comfort Index fell to -49 in the week ended May 18
from -47 the previous week, just one point away from its all-time low of -50 hit in February 1992. The index, started 22 years ago, ranges from -100 to +100. 'Surging (gasoline) prices correlate strongly with falling confidence, and gas is up another 7 cents this week to a new high of an average US$3.79 a gallon with the holiday weekend approaching,' the news outlets said in a statement. 'The weakened economy more generally, along with the ongoing credit and housing market crises, are adding to the damage.' Earlier on Tuesday, Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP economic optimism index rose to 40.3 in May from 39.2 in April, which was the lowest in the index's history. In that gauge, a reading below 50 indicates pessimism.
Oil soared to a record above US$135 a barrel as worries about US tensions with Iran heightened speculative fever in a market driven by concerns about tight global supplies and strong demand.

Market has become more volatile and unpredictable, investors should take profit in the month of may and adopt a wait and see attitude. Or switch to more defensive stock. I believed that stock prices should fall i the coming months and investor to scoop up some bargains.

No comments: