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Investors are enjoying some optimism in early trading today as they greet positive economic data with enthusiasm. The U.S. stock market is moving higher today, across the board, as investors react to reports that the U.S. economy expanded in the third quarter of 2009, signaling the technical end to the recession. Credit is being given to economic stimulus measures that helped start some economic activity.

MarketWatch reports on the enthusiasm some have for the economic stimulus measures:

“While it’s far too early to declare ‘mission accomplished,’ it is crystal clear that the Recovery Act was crucial in pulling the economy out of its tailspin and putting it on the path to growth,” said Josh Bivens, an economist for the Economic Policy Institute.

Clearly, though, there is a long way to go. The economy needs to be able to continue to move forward with recovery without additional stimulus from the government. Also, there are concerns about employment. This is having a somewhat restraining effect on what could have been a runaway rally today. But, since employment is showing a slight improvement this week, and since lack of jobs helps company bottom lines in terms of cost cutting, this is probably not going to have a huge impact — at least for now.

Buying stocks

Obviously, the time to buy stocks was months ago. But with the economy heading higher, there is still time to get some good bargains. It is a good time to look for solid income investing stock opportunities, as well as choosing some good fundamentally sound investments that are likely to grow. Many people are also deciding to get into index funds and ETFs right now.

For those that have increased their contributions to investment accounts during the recession, it might be time to consider backing off a bit now that you can’t get as much for your dollar. Although, if you can afford to keep putting in higher amounts, it’s probably still worth it.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

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Earlier today, the news was released that consumer confidence has dropped again. There had been hopes for a modest increase in consumer confidence ahead of the holiday shopping season, but employment concerns continue to weigh on consumers. The news sent the stock market lower in early trading, as investors worried that this vital segment of the economy would not be recovering anytime soon. However, things are taking a new direction, thanks to an upturn in oil prices.

Energy stocks rise, bring up the Dow

Energy stocks are on the rise, though, thanks to the latest movement in oil prices. MarketWatch reports on the response of the Dow to gains by oil:

U.S. stocks turned firmly up in mid-morning trade Tuesday, as crude oil futures rebounded from early weakness on optimism ahead of supplies data, lifting the energy sector of the market. …

Crude oil futures recently gained 67 cents to $79.35 a barrel, as traders weighed prospects of stronger Chinese demand ahead of U.S. inventories data due later Tuesday and on Wednesday.

Yesterday, energy stocks couldn’t hold onto gains, and were overcome by financial companies and sinking oil prices. Today, the opposite is happening. With the most recent report out of China about its likely economic report, speculators expect that oil prices will rise as China uses more oil to fuel economic expansion as we move into 2010.

The Dow still remains short of 10,000, and it is not likely to reclaim that level today, but there is a chance that, if things continue to move in this direction, we could see Dow 10,000 again by the end of the week. On the other hand, of course, any new economic data and concerns about economic recovery could change everything around, and send the stock market plunging again. We truly are at a very delicate and volatile crossroads.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

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Today’s housing market data has done little to help the stock market. After yesterday’s rally on optimism due to earnings, things are cooling off as investors look at the housing situation. It is clear that confidence in an already shaky housing market is deteriorating as the end of the first time home buyer tax credit approaches. This news is putting a damper on a rally based on economic recovery. At least, the damper is on the stock market. The U.S. dollar, on the other hand, is getting a bit of a bounce.

U.S. dollar gains as a safe haven investment

Many dollar bulls have been bemoaning dollar weakness recently. With investors in a riskier mood, not to mention focusing on U.S. debt (which undermines the dollar on a fundamental level), the U.S. dollar has fallen out of favor recently. However, with concerns about the economy back in focus, the dollar is being preferred as a safe haven currency. As an investment backed by the largest economy in the world, and by the most stable taxpayer base in the world, it takes little imagination to see why the dollar has safe haven status right now.

Could the U.S. dollar really crash?

Another issue with the recent weakness is that there might be a dollar crash. This, however, is somewhat unlikely. The dollar has mainly been returning to pre-financial crisis levels. It just seems like a dramatic drop because of how much the greenback gained during the recession. The return to normalcy feels more dire than the situation is. Besides, The Forex Blog points out, it’s not like any other currency is in a much better position:

While forex investors in recent years have enjoyed ganging up on the Dollar, the fact remains the fundamentals for the other major currencies remain just as weak. For example, a model of purchasing power parity developed by “the Organization for Economic Cooperation and Development finds the dollar is worth roughly 0.85 euro, compared with its market valuation of 0.67 euro, suggesting that the euro is 21% overvalued.”

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.