Economic activity is largely driven by sentiments that Investors and Consumers hold in any scenario. Measuring their optimism and fears can be the most reliable way to predict performance of financial instruments. Read on for more insights:-

Recently, stock markets gave bears a run for their money, and shot back up kissing 11,000 from a point where everyone was concerned that it might free-fall below 10,000. However, the American consumer sentiment is still on decline and housing market stands still. Will the Americans revive their lost wealth?

Month of May 2010 so far has proven to be very depressing for usual investors. European debit crisis coupled with several other worldwide events such as BP oil spill, China’s announcement regarding potential pullback in European bonds, tension between North and South Korea, are taking a major toll on the market currently. Euro is trading at 4 year low level and DOW traded under 10,000 market after February.

After a drop in retail and financial shares, the stock market suffered a hit and fell again; coming just one week after one of the biggest falls the Dow Jones has ever seen. This worries some investors because of the possibility that the market may be going down after going up and recovering for so long. Many experts are stressing that this is only a blip on an otherwise good trend for the stock market.

As U.S. Treasury prices fell drastically, the dollar and stocks moved up higher. The reason for this was because jobs were created by U.S. employers at their fastest rate in three years, which gets a lot of investors thinking the economy is improving for good.

All economists and investors are looking at the data coming out of the Commerce Department related to consumer spending. As well, there is a lot of attention being paid to income levels in the United States in February. Investors want to get more confidence in the market, and with higher consumer spending that is easier to come by, but with stagnant income growth, there is still a clear problem with the economy.