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Market tug of war: The U.S. v. Europe

After a strong open to 2012 on the markets yesterday, today was more of a mixed picture, as the U.S. and European markets battled in a sort of tug of war.

After a strong open to 2012 on the markets yesterday, today was more of a mixed picture. Some early concerns about tight European credit markets making it expensive for European banks to raise capital dragged the markets down in the early hours. That was countered a bit by more trickles of good news about the U.S. economy.

New orders for U.S. factory goods rose solidly in November, though they were tempered by news that business capital spending is cooling. And, good news from the big three in Detroit. Chrysler, Ford and GM all reported strong sales in December, with Chrysler taking the lead with 37 percent jump. Ford had 10 percent growth and GM had 5 percent. With people keeping their cars, on average, for 11 years now -- rather than the car manufacturers' recommend eight and a half years -- the year-end sales may be attributable to people really finally needing an upgrade.

Stephen Wood is a chief market strategist for Russell Investments. He says in spite of ongoing challenges in our housing and labor markets, the financial markets are responding to a measureable upward climb of U.S. economic data. Still, 2012 is likely to be dominated by the tug of war between the U.S. improving and Europe struggling to solve its sovereign debt crisis.

Wood adds that he's optimistic about the new government's unemployment numberes coming out on Friday. He says while state and local governments are still cutting jobs, private companies are hiring. Wood says there may not be a huge drop in the number of people still looking for work, but he's expecting a rosier picture than we've seen in recent months.

About the author

David Brancaccio is the host of Marketplace Morning Report. Follow David on Twitter @DavidBrancaccio
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