As Week ends, the Dow is up

[Neil D]

As Week Ends, Shares Manage to Stay on Upside

Published: March 13, 2009

Wall Street closed higher for the fourth consecutive day on Friday, capping its best week since November, and one that gave investors a break from a relentless streak of declines.

Jim R. Bounds/Bloomberg News

General Electric, which makes jet engines, was stripped of its triple-A credit rating, but just by one notch, less than predicted.

The Dow Jones industrial average closed 53.92 points, or 0.75 percent, higher to finish the week at 7,223.98, and the Standard & Poor’s 500-stock index rose 0.77 percent, or 5.81 points, to 756.55. The technology-heavy Nasdaq index was 5.4 points, or 0.38 percent, higher at 1,431.50.

For the week, the Dow finished up more than 9 percent while the S.& P. 500 ended 10.7 percent higher, largely on the back of rallies on Tuesday and Thursday. A closely watched gauge of market volatility dropped for the week.

The gains on Friday came as investors responded to Chinese concerns about its holdings of government debt and a rosy assessment of the economy from Lawrence H. Summers, a top economic adviser to President Obama.

In a talk before the Brookings Institution, Mr. Summers pointed to some signs showing an easing in the pace of economic contraction, but he said that the economy’s problems would not be solved overnight.

Before the markets opened, China’s prime minister, Wen Jiabao, said he was “a little worried” about the country’s $1 trillion investment in United States Treasury debt. China is the largest purchaser of American government debt, which is generally considered the world’s safest investment.

Long-term Treasury prices fell slightly on Friday as investors mulled over the comments from Mr. Wen and wondered whether they presaged a reduced appetite for American debt as the federal government ramps up huge new spending projects.

The Treasury’s benchmark 10-year note fell 10/32, to 98 25/32, and the yield, which moves in the opposite direction from the price, was at 2.89 percent, up from 2.85 percent late Thursday.

Crude oil settled 81 cents lower at $46.25 a barrel, and large energy companies ended the day mixed. The gains in the Dow and S.& P. 500 this week brought the market indexes back from their worst levels in about 12 years.

After enduring months of increasingly bleak headlines about bank solvency and corporate losses, investors seized on a few strands of less-than-awful economic news and alchemized them into hope, breathing life back into depressed financial shares and other niches of the market.

This week, Bank of America, JPMorgan Chase and Citigroup assured investors that they had turned a corner in the first months of 2009 and were operating at a profit. All three big banks have received government aid under the $700 billion financial bailout, and the government has taken a 36 percent stake in Citigroup.

Shares of the big banks were mixed Friday. Citigroup closed 11 cents higher at $1.78 while Bank of America and Wells Fargo fell by a penny, to $13.94.

Investors also put a positive spin on new retail sales numbers, which fell less than economists had expected, and said they breathed a sigh of relief after a long-anticipated downgrade of General Electric’s triple-A credit cut the conglomerate’s rating by only one notch.

Investors continued to speculate that regulators were considering changes in mark-to-market accounting rules, which regulate how companies value assets. And they cheered statements that the Securities and Exchange Commission could reinstate a regulation intended to slow the short-selling of stock.

Although investors were pleased with the bounce in the stock indexes, which had fallen some 25 percent since the start of the year, experts cautioned that three days did not make a bull market.

“You will see rallies like this from time to time as we bounce along the bottom of the market,” said Joseph V. Battipaglia of Stifel Nicolaus, discussing Thursday’s gains. “Recent history has had a lot of hopes dashed on big rallies. The question is, what about this time around?”

The government offered another reminder on Friday that the American economy was still in a global downturn, reporting that the trade deficit shrank for another month in January as overall trade volumes dwindled.

The Commerce Department said that American imports and exports of all goods and services totaled $285.8 billion in January, down 20 percent from the January 2008.

[fccool]

Dow is a biggest running joke right now. It's the only facade left that keeps the world believing that dollar is worth more than the paper.

[Dr. Shane]

I think it is proof positive of a bias media that when the Dow has a good week they all sing the same chorus of the economic rebound coming. A week is only a hiccup in an economic cycle. It is very premature to claim the economy is starting to turn around. This story has gotten way too much press coverage.

[Woody]

Good Point Shane. But the media is so liberal slanted ... they are desperate to make Obama the King and our Saviour.

[olger]

True Sir.

[Neil D]

Wow! Did you guys even read that article?

In case you don't realize it, it's from Bloomberg News...a news rag that reports on the economy...And it claims though the White House is cautious in it's assesment, it believes that this is the begining of signs of a turnaround...

Wow! First rays of hope for the American people, and you guys are out to squash it and take America back into it's depression....All I can say is

shame on you..

[Woody]

One week does not make a Kingdom.

My prediction is that Obama will find a way to make it tank soon.

[Neil D]

One week does not make a Kingdom.

Never said that it did.....All I am saying is that there is evidence of a turnaround...I am sure that there will be ups and downs...but hopefully, the tailspin that happened on Bush's watch may be easing...

[Woody]

It is interesting that the American people are not buying what Obama is doing. The president's poll numbers continue to tank. And this is his 'honeymoon'.

[Neil D]

It is interesting that the American people are not buying what Obama is doing. The president's poll numbers continue to tank. And this is his 'honeymoon'.

[Woody]

I was referring to reliable polls such as the Rassmussin. I hardly consider the NEWSWEEK poll as accurate.

[Neil D]

I was referring to reliable polls such as the Rassmussin. I hardly consider the NEWSWEEK poll as accurate.

[Woody]

NOT

[phkrause]

Isn't it funny Neil that all those that yelled the loudest about the dow, as it kept going down everyday, now say that the dow really doesn't mean anything. Well I've always figured that. Never have paid attention to it.

pk

[Dr. Shane]

Wow! Did you guys even read that article?

...it claims though the White House is cautious in it's assessment

My comment was in regard to the media not the White House.

[Dr. Shane]

All I am saying is that there is evidence of a turnaround...

No, there isn't. I wish there was but there isn't. One good week is not evidence of a turnaround. Let's see one good month on Wall Street combined with unemployment going down with inflation staying in check.

[olger]

There was a quiet dignity about Ronald Reagan, and his ability to motivate people. I cannot but notice the sharp difference between the "Man-child" who keeps pushing government as a replacement for ambition & optimism and the "Gipper" who saw government as a hindrance to these God-given virtues.

`oG

[Neil D]

No, there isn't. I wish there was but there isn't. One good week is not evidence of a turnaround. Let's see one good month on Wall Street combined with unemployment going down with inflation staying in check.

Evidence is just that....evidence....it is NOT proof...but it is a fact...In this case, it MAY be the begining of a trend...But no matter how you slice it, it is a positive note on a depressing last six months...

That is why, THE WHITE HOUSE is CAUTIOUS in saying that there are indications that it is a turnaround. You are correct that it is NOT a turnaround, but it may be the begining.

I have to assume, that they have information that I do not have. Because I will be a bit POed if the evidence next couple of weeks shows otherwise...they have to be careful as to what they are saying....So, when the White House says that this is an indication of a turnaround, I will listen and I would, if I had the money, and the know how, would invest in the stock market at this time....

[Dr. Shane]

The big concern is that when the economy starts growing again inflation is going to take off. So even when economic growth takes hold we are not going to be out of the woods until we see that inflation can be held at bay. It is way too early to start making any predictions of a rosy future.

[Neil D]

No one said anything about a rosey future, and no one said anything about inflation taking off...We are being myopic here and worrying about ONE thing at a time....At this time, it is to stop the tailspin of loosing jobs...Of which, this past week, we saw the market up...if this continues, then that is ONE hurdle that is being managed. [notice: I did not say it cleared it...only that it is being managed...] at any rate, this is a hopeful sign....

[Dr. Shane]

1. One week is just a hiccup for the market. That is too short of a span to consider it evidence or anything else. The market goes up and down every day throughout the day.

2. Job loss and inflation are tied together. We cannot worry about one without worrying about the other. Do we want to solve our job loss problem only to start an inflation problem? Of course not. When all this stimulus money starts taking effect it is likely to cause inflation to take off. THE GOVERNMENT IS PRINTING MONEY!!! That is a chief cause of inflation. Unemployment only impacts those losing their jobs. Inflation impacts everyone. Are we ready for the Obama economy?

3. The Federal Reserve now has the prime interest rate at .25%. That is the lowest it has ever been. 6%-8% is a good rate for a healthy economy. In inflation takes off the Federal Reserve is going to need to raise interest rates dramatically to try and slow things down/

The next four years are likely to be complete economic turmoil. We really need to pray for our leaders.

[jasd]

QR frame:

"...'ware the bear that walks like a man."

Okay, so I ripped-off ol' Kipling...

What we seem to be witnessing may be no more than that predicted 'Bear Rally'.

It is forgotten that most investors during the Great Depression lost their investments in the upticks of the market.

"...'ware the upticks."

[Neil D]

1. One week is just a hiccup for the market. That is too short of a span to consider it evidence or anything else. The market goes up and down every day throughout the day.

[Dr. Shane]

Originally Posted By: Shane

1. One week is just a hiccup for the market.

I disagree.

Based on what qualifications?

[Woody]

There was a quiet dignity about Ronald Reagan, and his ability to motivate people. I cannot but notice the sharp difference between the "Man-child" who keeps pushing government as a replacement for ambition & optimism and the "Gipper" who saw government as a hindrance to these God-given virtues.

`oG