Blog : Penny Stock Week: The Bull's Broad Base

by Ed Zwirn on October 20th, 2013

The end of the latest U.S. political standoff has so far been followed by a broad-based bull market that has seen every major stock index but the Dow propelled to all-time highs. In a bullish signal, penny stocks and other small-cap investments are outpacing higher-priced shares as investors show an increased appetite for risk.

To be sure, the high-rent district is performing well enough, with the Dow Jones Industrial Average closing Friday at 15,399.65, up 1% from the prior week's 15,237.11 but down from levels hit in September.

But the broader market scored much better than the Dow, with both the NASDAQ Composite, which rose 3.2%, and the penny stock-rich Russell 2000, which gained 2.8% on the week and is up 31.2% so far this year, closing at all-time highs.

On a lighter note: Debt ceiling debates notwithstanding, not at any point last week did we see any stampede away from U.S. debt, which continues to hold the "safe harbor" repute it has enjoyed since the last Confederate Civil War victory. The government continued throughout the latest manufactured crisis to borrow cheaply, with the yield on the 10-year Treasury barely flinching, ending the week at 2.69%, up from 2.68%.

Looking ahead, investors, having been granted temporary respite from political sideshow, will be treated to a raft of stale data over the next few weeks as the government's statistical machinery, idle for 16 days, cranks back into operation:

--Tuesday morning will see the delayed release of one of the government shutdown's first casualties. The impact of the September jobs report, which had been due on Oct. 4, will probably be limited both because it is already old news and because the October report is due Nov. 8.

In any case, Tuesday's report will have to be really depressing before it can beat out the gloom which pervaded the August report, which came out Sept. 6. At that point, we learned that an astonishingly low 136,000 jobs per month had been added in July and August. As of just before the start of the 16-day shutdown, the consensus had called for 183,000 new jobs to be added for September, up from August's 169,000.

--Inflation watchers will have to wait until Oct. 29 for the release of the September Producer Price Index. The August PPI, released on Sept. 13, showed core prices staying flat and the consensus calls for an overall 0.2% September PPI rise, with the core ticking up 0.1%. Consumer prices will be updated he following day and are expected to show a 0.1% September rise, the same as August's.