Falling Consumer Confidence: Not a Death Knell for Stocks
A review of recent history illustrates falling consumer confidence does not necessarily forecast poor stock market performance. Today’s report and market action is concerning, but consumer confidence’s peak early in the last recovery cycle did not mark the end of the bull market. In fact, while the University of Michigan/Reuters consumer confidence Index dropped 27% from January 2004 to October of 2007, the S&P 500 Index gained 42%. It should be noted 2004 represents a very similar part of the recovery cycle to where we are today in 2010.
