The Dow Jones industrial average traded above the 13,000 mark every day last week and finally closed above that psychological barrier yesterday. As longtime readers know, I have been touting the strength of this post-2008 bull market for years, even during the inevitable dips.
On Oct.11, for instance, I said, “As earnings season fast approaches, it is hard to be bearish when the S&P’s third-quarter earnings are expected to rise 13% above last year’s third quarter. Meanwhile, stocks are trading at historically low P/E ratios. Bloomberg reported that the S&P 500 was trading at just 10.2 times 2012 forecasted earnings last Monday, which is 25% below its average in the past nine recessions — and we’re not even in a recession!”
At times, the market has tried my patience. I endured a few e-mail complaints about how I was “wrong” about this recovery, yet as of last Friday, the market is up 20% or more by any index you care to choose.
|Index||Oct. 3, 2011||Feb. 24, 2012||Gain|
|Source: Yahoo! Finance|
Overseas markets have also done well. Since the Oct. 3 low, more than a third of the 45 indexes that make up the MSCI All Country World index have risen 20% or more, according to Ned Davis Research.
This market surge was fueled by “positive surprises” in global economies as well as in corporate earnings. This trend continued last week. On Friday, we learned that the Thomson Reuters/University of Michigan consumer sentiment index rose to 75.3, versus economists’ expectations of 73 — its highest level in a year.
In addition, the Labor Department announced on Thursday that weekly jobless claims were unchanged at 351,000, while the four-week average fell by 7,000, to 359,000, reflecting an ever-improving job market.
Next Friday, we should see a continuation of that positive trend with the February payroll jobs report. As for closing above 13,000, I’m excited to see what the rest of the year has in store for us.