Two major indicators of stock market health – the Standard & Poor’s 500 stock index and the Dow Jones industrial average – ended 2013 with the highest gains since the end of last century.
While the 2014 market started a bit flat after New Year’s Day, investors were still absorbing the good news about the 2013 stock market.
The S&P 500 increased by 29.6% in 2013, the index’s best annual performance since 1997. The big jump added $3.75 trillion in market value, according to the New York Times.
Meanwhile the Dow Jones jumped by 26.5%, the best performance since 1995.
Also, the Nasdaq, the market for technology-driven stocks, increased by 38.3%, the best year since 2009.
In employment news, the state unemployment benefit claims dropped by 2,000. This is the second such drop in as many weeks. The total number of claims stood at 339,000, according to a report from the U.S. Department of Labor.
Jacob Oubina, a senior economist at RBC Capitol Markets in New York City, told the New York Times that given the usual volatility of the labor market over the holidays, the steady improvement of employment numbers in December was “a welcome sign.”
Markets in the United States are expected to be light in trading during the week after New Year’s Day. Traders and investors will take time to absorb what has been a host of fairly positive information about the economy before deciding investment strategies for the new year, according to the New York Times.
“Investors are going to take a deep breath and try to assess a new set of data for the year, that may mean waiting until we see employment data next week,” Jack Ablin, of BMO Private Bank in Chicago, told the Times.
The unemployment rate, which stood at 7% in November, could fall even further, according to experts. Part of the reason is the end of the emergency unemployment compensation plan on Dec. 28. The plan had been put in place in 2008 during the height of the recession.
With funds from the government cut off, people may either join the workforce, taking jobs they otherwise would have bypassed, or drop out of the labor force altogether. The effect could be as much as half a percentage point coming off the unemployment rate, according to the Times.
