The North Mobile Post

    Three pieces of good news had the stock market soaring on Wednesday morning. The first piece of good news was the European Central Bank’s decision to go through with a potentially unlimited bond buying program to sure up the EU’s finances. The move is designed to lower European countries’ borrowing costs. The second piece of good news came in the weekly unemployment claims report, which showed claims fell for the first time since the beginning of August. The third bit of good news came from the ADP employment survey, which showed that 201,000 new jobs were created in August. The Labor Department’s official numbers are expected Friday.

    The news from Europe is the biggest factor in the stock market’s rally today. Fears of problems across the world economically have been weighing on Wall Street for months. Problems in Europe are coupled with fears of a slowdown in China. If both regions fall into recession, the US would likely follow as exports would weaken tremendously. The world economy is interconnected like never before, and weakness abroad will be felt at home.

    The job numbers and unemployment figures were great news, but the Labor Department’s findings are not expected to be as good on Friday. Unemployment could remain at 8.3%. Job creation will need to exceed 250k a month in order to drive down the unemployment rate long term. Still, good numbers are better than bad numbers, so the data should be hailed somewhat. The country is moving in the right direction.

    The economic data is great news for President Obama, who will take the stage tonight at the Democratic National Convention to accept his party’s nomination for president. Last night, former President Bill Clinton gave Obama a strong endorsement, making the argument that the economy was getting stronger and that Obama needed more time to turn things around. These numbers help propel that argument.

    Mitt Romney is likely going to make the argument that the number are good, but not good enough. He will claim that the Obama recovery has been historically weak, which is accurate. Friday’s job numbers will probably be below 200k, which is not enough to drive down unemployment. Romney will probably capitalize on this fact.

    Any jobs number over 100k is good enough to keep the race tight. President Obama can not afford to have job creation fall below that number, or his re-election chances will free fall. He is already dealing with record high gas prices, historically long term high unemployment, and high food prices. The president needs employment data to be good each month before the election, or he may find himself among the unemployment come January.

**Update** The Nasdaq ended the day at its highest level since the year 2000. The S&P 500 reached four year highs.

Join the Forum discussion on this post