The 15% surge in stock market indexes in the last four days may or may not be the long-awaited turnaround we've been looking for on Wall Street. But it will bring fundamental changes in the economic environment
, including truck sales and freight levels in the next few months if most of this gain holds for a week.
The net impact will be neutral for consumer goods, but slightly positive for business equipment and services.
Already, the benchmark 10-year Treasury Bill yield has risen from 3.6% last Thursday to about 4% by Tuesday afternoon as investors have reversed themselves, selling bonds to get back into equity markets.
This abrupt change means that mortgage rates will be marked up, taking a small bite out of housing and cash-out mortgage refinancing. It also means higher costs to subsidize auto loans, so buyer incentives are likely to be trimmed soon.
Money is certainty already flowing in the U.S. to invest in the stock market as evidenced by the steady appreciation of the dollar in the last few days. This reduces import prices and spurs more imports. The reverse happens to exports. Notwithstanding, currency trends into 2004 are expected to favor exports and restrain imports. Short-term, this is not good news for carriers hauling domestic goods with strong import competition, such as apparel, shoes, textiles, toys, household goods and industrial materials or U.S. manufactured export goods, mostly durable goods, facing strong price competition in foreign markets.
The stock surge will revive the recently stagnant consumer and business confidence measures. As a result, the capital goods market will begin growing again after a tentative uptick last spring. This is positive for regions dominated by high-tech manufacturing in the Great Lakes, Northeast, upper South and Pacific.
Finally, Wall Street itself gets a much needed boost. The financial market, excluding mortgage brokers, have been shrinking so far this year. More layoffs had been expected. Now there will be fewer. This is positive for general freight in New York, Boston, Chicago and San Francisco.
If stock indexes quickly return to last weeks' low level, then all of this will happen in a few months when a sustained turnaround occurs.