(Week in Review is provided weekly to teachers registered in The Stock Market Game, connecting curricular content to current events. Content of each issue is often of interest to any teacher of economics and personal finance.)
The end of February was a choppy time on Wall Street. Going into trading on March 2, the Dow was down two points from the previous week’s close, but it hit 13,000 on Feb 28 for the first time since May 2008. While the 13,000 level is not considered technically significant, it is a psychological milestone.
Federal Reserve Chairman Ben Bernanke also headed to Capitol Hill to give Congress his semi-annual report on the economy, and what he had to say wasn’t exactly rosy. The job market remains “far from normal,” household income is flat and access to credit remains too tight for many people, he said. Meanwhile, rising gas prices are likely to reduce consumer buying power and the housing market remains a drag.
In Europe, efforts continue to bring the continent’s debt crisis under control. At the end of a two-day meeting in Brussels, 25 of the 27 leaders in the European Union signed a so-called fiscal compact designed to prevent a future crisis by strengthening budget discipline. The fiscal pact includes a “balanced budget rule” that requires governments to keep deficits below 0.5% of gross domestic product. Those that break the rule will be subject to an “automatic correction mechanism,” which has yet to be defined. The goal is to prevent a future crisis and foster economic growth by ensuring that governments do not spend beyond their means and rack up unsustainable debts, said European Council president Herman Van Rompuy at a signing ceremony.
To follow up last week’s Week in Review newsletter regarding IPOs, students are probably familiar with Yelp, the online reviewer of restaurants, salons, and other businesses. Yelp officially went public yesterday and raised $107.25 million while their $15/share price set their company valuation at nearly $900 million. Its shares start trading today on the New York Stock Exchange under the ticker symbol “YELP.” See them ringing today’s opening bell on the NYSE here. In terms of The Stock Market Game program, students should be able to start trading Yelp in the next week.
Another company that has been in the news quite frequently as of late and of which your students are probably fans is Zynga (ZNGA). Its shares are on the move after the online game developer announced a new online platform, www.zynga.com, which will allow users to play Zynga’s games like FarmVille and Words With Friends on its site and reduce the company’s dependence on Facebook.
And finally, happy birthday to Dr. Seuss who would have been 108 years old today. What better way to celebrate his birthday than reading to a child. The NEA’s Read Across America campaign celebration’s theme this year is being green and showcases Dr. Seuss’ The Lorax. The SIFMA Foundation also exposes SMG students to “green” investing through its project “Going Green” in the Teacher Support Center. This project introduces students to the concept of “environmentally responsible investing” through activities based on The Lorax. Students will examine how companies balance their need for raw material with their need to manage those same resources to insure future availability and supply. It is accessible in the “Projects” section of the Teacher Support Center.
Written by Elizabeth Reidel, Vice President, National Director, The Stock Market Game program, SIFMA Foundation.