Three weeks of market improvement create optimism for the economy

By Jeff Reinke, Editorial Director, PD&D

"While I’ve begun to temper my feelings of economic optimism in fear of being crushed with another downward turn in the market, there are a number of positive signs to take away from the performance of the Product Design & Development Stock Index this week."

While I’ve begun to temper my feelings of economic optimism in fear of being crushed with another downward turn in the market, there are a number of positive signs to take away from the performance of the Product Design & Development Stock Index this week. The index improved more than 63 points to finish at 1228.23. This marks the third straight week of improvement, at an average climb of nearly 50 points per week. Over the same length of time, the Dow was up about 400 points.

Although all segments were up from the week prior, the marketplace showing the lowest amount of growth was the medical sector. While it has proven to be less volatile, in terms of price fluctuation, when compared to the other segments, the purchasing dynamics of this marketplace may have begun to take hold.

With many larger purchases approved 12-18 months in advance, the recessionary impact was much slower. However, with unemployment numbers continuing to hover at over 8 percent, a lack of company-sponsored medical insurance could deter some from seeking non-critical medical care. Fewer patients results in less capital for providers to invest in new products, and lower overall consumption rates for consumable products.  

In contrast, the industrial index saw the greatest increase, with only one company posting negative gains. Factors helping to improve this sector could include a PMI (Purchasing Manager’s Index) that continues to inch upwards. Additionally, a Boomberg.com report from earlier this week speculated that global inventories are finally starting to decrease, which will obviously help spur manufacturing activity.

So if more of these people can get back to work, maybe they’re spending a little more on consumer electronics, a segment which also saw nice gains this week. Either that or the unemployed are taking some extra time to catch up on the latest in computer equipment, games and accessories, as both Apple (APPL) and IBM (IBM) posted significant increases over last week.