Another day, another bounce–but I don’t think we’ve put a new trend–in either direction–in place
Today’s bounce is being attributed to a hike in global economic forecasts by the International Monetary Fund. The IMF raised its forecast for U.S. GDP growth for 2012 to 2.1% from 1.8%. The projections for global growth went to 3.5% for 2012 from 3.3% and to 4.1% for 2013 from 4.0%. Projections for growth in China are 8.2% in 2012 and 8.8% in 2013.
Not every region of the globe was equally fortunate. The IMF projects that EuroZone GDP will contract 0.3% in 2012.
Good news is always welcome—even if it’s only good news about economic projections rather than actual data—but before you start ascribing super powers to the International Monetary Fund (rumors that Christine Lagarde has been cast in the new Avengers movie are completely unfounded, I’m sad to report), you should note that today’s bounce comes after a decline from the April 2 high on the Standard & Poor’s 500 at 1419. The previous bounce from 1359 on April 10 to 1388 on April 12 lasted just three days.
I think the market right now is ruled by extreme nervousness over the possibility of 1) missing the continuation of the 2012 rally or 2) staying too long at the fair and getting caught in a post-rally correction. The extreme volatility in shares of Apple (AAPL) is a good example of this nervousness with $20 a share up day succeeding a $20 down day.
Despite the IMF forecasts, we’re still stuck with the same uncertainty about the Spanish debt crisis and growth rate for China’s economy that we had yesterday.
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