Hope on accounting front overpowers unemployment worries
Small-cap stocks pushed higher Thursday, boosted by talk that the Obama stimulus plan and his measures to help banks could include a provision to suspend the “mark-to-market” accounting provision that many say hurts financial balance sheets. In addition, tech stocks and retailer shares showed surprising strength that allowed the market to look past sobering economic data on the employment and factory orders front. The tech-laden Nasdaq 100 Index rose 2.4% on the day, while the Russell 2000 (NYSE:IWM) closed up 6.60, or 1.47%, at 455.08 and is now down 8.8% for the year. Meanwhile, the Dow is off 8.1% for the 2009, while the S&P 500 is down 6.3%.
Critics of the mark-to-market accounting procedure say that it forces firms to write-down losses on unrealized assets, which in turn bloodies the bottom line prematurely. However, proponents of the accounting process say it helps avert disasters like the Enron debacle. President Obama is slated to hold a press conference Monday evening to rollout his stimulus plan to the world in an effort to build momentum to get the $800 billion package pushed through a divided political landscape.
It was encouraging to see the stock market grind out a positive session today, especially in the face of disheartening data on weekly unemployment claims and slumping factory orders. The claims report came in at 626,000, which was way above the projected figure and also at 26-year highs. What’s more, the number of Americans forced to file for continuing unemployment benefits rose to 4.78 million, the highest number in history. Having a record number of people on the unemployment rolls the day before the monthly Labor Department employment report seemed quite daunting this morning, but the market quickly embraced the accounting talk and looked past the data.
Also on the economic front, the factory orders report tumbled 3.9%, . . .
Critics of the mark-to-market accounting procedure say that it forces firms to write-down losses on unrealized assets, which in turn bloodies the bottom line prematurely. However, proponents of the accounting process say it helps avert disasters like the Enron debacle. President Obama is slated to hold a press conference Monday evening to rollout his stimulus plan to the world in an effort to build momentum to get the $800 billion package pushed through a divided political landscape.
It was encouraging to see the stock market grind out a positive session today, especially in the face of disheartening data on weekly unemployment claims and slumping factory orders. The claims report came in at 626,000, which was way above the projected figure and also at 26-year highs. What’s more, the number of Americans forced to file for continuing unemployment benefits rose to 4.78 million, the highest number in history. Having a record number of people on the unemployment rolls the day before the monthly Labor Department employment report seemed quite daunting this morning, but the market quickly embraced the accounting talk and looked past the data.
Also on the economic front, the factory orders report tumbled 3.9%, . . .
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