Dow, S&P near all-time highs while economy slumps. Why?

My best guess is that the market is discounting expected rate cuts in the near future. Eventually, though, the market will probably correct and may enter a bear phase, since a Fed that is cutting rates is doing so to keep a slowing economy in check.

Also keep in mind that the indexes have been treading water for a long time, while earnings power continues to increase. Look at the charts of DIS, KO, GE -- all of which I own -- and check out their fundamentals; there's been a disconnect for a while now. All are due for increases; perhaps the market is seeing this?

why would anyone believe anything controlled by the government.What is a market oversold? We are supposed to invest in the stock market and everyday, somebody is telling you to get out and the stocks go up and down.

The prevalent investor euphoria when the stock market is up, as it is now...September 26 2006, is not only short-sighted but downright dangerous for new investors to emulate. Investing in the stocks should not be based mainly on how the investor feels today rather it should be measured on how the investor feels in the future, at the cashing out time. Investment is a marathon, not a sprint! That is why Boggle and Buffets of the investment world are admired and respected by many, including this blogger.

The premise of your article begs "correction" at the next excuse.

I like the way the stats are so rigged.like unemployment, they only count the people who made apps for the last ninty days. They don't count people past that, they don't count people who were denied, or people who ran out looks like ENRON STATS.Katrina wiped out the gulf and there building down there so thats a bump.Gasoline prices are down now but what changed? to do that? its the same as it was in june IRAN is still there with the nukes hugo is still there what changed ENRON STATS ONCE MORE!!! except the auto industries down, housing down, prudo bay down, intrest rates are still high. The IRAQ war is not put on the feds debt, thats a joke! Its an off line item i wish i could do that with my mortgage!!! personal bankruptcy is soaring, illegal immigrants are working for pennys, under cutting wages.Republicans look at them as cheap labor, and demacrats look at them as voters.The healthcare sys it bankrupt! premiums are sky high.We are fighting a war with one hand tied behind our backs.All big retailers buy from CHINA who sells NUKE TECH to IRAN along with RUSSA who sells ROCKETS to HEZBOLLAH who bombs ISREAL!What a circle.Yep ONE HAND TIED BEHIND OUR BACKS.When october comes so does the CRASH...SO the STATS ARE LIKE ENRON you can buy into it but the stats are rigged!!!!

I'm baffled by it all. First oil is in limited supply, we're running out of it, then the pipeline is closed meaning even less oil. Then comes a find in the Gulf and all our troubles are gone

Yes and September 1929 was a great time to be in stocks...historic highs, the economy humming along, everyone making money...then a month later, not so good.

The difference this time around is 9 trillion more dollars of debt (growing at 3/4 trillion a year), an economy at the end of an economic cycle (and no, it isn't different this time), and a housing market tanking faster than the Exxon Valdez. Oh, and I forgot to add a couple of small things - two wars sucking 300 billion a year, the next rusty pipeline about to leak, and three guys and a jeep-mounted rocket launcher with their sights on the Saudi oilfields. So much for $60 oil.

You do the math, then hold on to your hard assets, take cover, and pray to whatever higher power keeps you smiling.

well take a step back and take a look at what you can see -- not what you have heard...all that info is good news controlled by the good news people....so if you have a doubt it's legit - if you have a concern it is real......

There is an election on the horizon and this is a big factor in what's motivating (manipulating, dare I say it) the stock market as well as gas prices. It makes me nervous. Small time investors, beware!

As I read the posted comments, it never ceases to amaze me how partisans create their own reality. The federal unemployment indicators are misguided as one poster said (see above)....leading analysts say the true unemployment number is between 9-10%, urban survival gives a great in depth look at this.

Also, yes the housing market is definitely slumping as most areas are see record inventory levels on the market. The National Association of Realtors has reported a record drop in median home price TY/LY...hinting that the housing boom is definitely gone.

I am not trying to be negative just realistic. GDP tanked by almost 50% (woah this is the indicator to watch)...and the dollar is persistently losing value to competetive currencies like the Euro.

So it does defy logic, but the average joe isn't getting it....and mom and pop day traders could end up getting really burned if they aren't careful.

watch elan the stock for the future with teir drugds for Altzeimers and MS

the economy seems rosey to some, because their incomes are up, and they hear that things are ok on the news. however, the value of the dollar has plummetted, inflation has soared. people are fooled that their doing better because their income has increased but not even close to the amount the prices of goods and services have risen. when the dow hit 11,700 in 2000 the prices of most goods and services were 1/3 of what they are now(most prices have tripled). so most peoples' buying power has been shaved by 2/3s and dont really realize it. what a scam how our own country misleads us

The Federal Reserve actually makes more accurate inflation forecasts than the private sector does in exception of private sector opinion as well as forecasting output as well. Its success is due to its large staff and its access to more extensive information than private sectors have.

It's very simple, in my opinion. You have the real estate bubble bursting and investors with money are looking to get into something that will bring returns. Money has been made in real estate and the profits are being invested in the stock market ahead of all the laggards. It's a repeat of what happened when the internet bubble burst. Those who took their stock profits in March of 2000 plowed them into the real estate market. Having made their money there(real estate), they sold their holdings before the herd and went back into the stock market when it was still low. It's very simple, actually. I hope I didn't confuse anyone. Investors (the smart ones) are constantly looking for opportunities to make money. The key is to go against the herd mentality.Some just keep making money while others just keep losing it, over and over.

I am a registered nurse and in my fifties. I live in an agricultural area with military ties. This area has historical double digit unemployment. No, not Arkansas, California! My husband and I went through tough times financially. I have only been a nurse since 1995. New homes here start at $350K. Please, if you are fortunate enough to live in a place with a low unemployment rate, don't be so ignorant as to believe the economy has never been better- just because you make more money now than you ever did. My husband and I make more money now than we ever did. But we know, when our adult children cannot get full-time jobs, much less health coverage, the economy is not in good shape. We are here because the military sent us here 15 years ago. It is not our kids fault they had to start out in such an unlevel playing field.