Despite higher jobless claims and a contracting GDP, stocks shot higher again on Thursday — putting the Dow (DJI) up 21% in just 13 days. According to The Wall Street Journal, it is the quickest rally since 1938 despite doubts on the part of many analysts and stockholders.
Better-than-expected earnings from Best Buy (BBY) sparked a rally in the retail stocks. Though they’ve led recently, financial stocks languished for most of the session, only gaining at the close. The financials closed up 1%.
General Motors (GM) led a strong Dow 30. It was up 14.05%.
At the close, the Dow Jones Industrial Average (DJI) rose 175 points to 7,925. The S&P 500 (SPX) gained 19 points, closing at 833, and the Nasdaq (NASD), up 3.8%, closed at 1,587, a gain of 58 points.
On the NYSE, 1.8 billion shares were exchanged with gainers ahead by a margin of 4-to-1. The Nasdaq traded 940 million shares with advancers there ahead by 5-to-1.
The April crude oil contract gained $1.58, ending the day at $54.35 a barrel, and the Amex Energy SPDR (XLE) closed at $45.83, up 39 cents.
Gold continued to gain as the dollar fell. The April gold contract rose $4.20 to $940 an ounce, and the PHLX Gold/Silver Index (XAU) gained $1.02, closing at $140.43.
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What the Markets Are Saying
The S&P 500 (SPX) is up almost 25% from its March 6 low and is knocking on the door of the widest and deepest resistance zone in the bear market at S&P 820 to 920.
Yesterday, we discussed the analysis done by Mark Arbeter of Standard & Poor’s. Mark concluded that the market is due for a pause and then a “decent advance” before we see another correction (down). He ended his report with, “We would use any strength in the stock market to lighten up and then wait for the next bottom to develop before adding to positions.”
His analysis is impressive but this market doesn’t read the newspapers, and bullish behavior like that of the past 11 days begets more bullish behavior.
And speaking of behavior, for the first time in this bear market, bad news was ignored and the market rallied by almost 175 points. The bad news was that Q4 GDP showed a 6.3% rate of contraction, and jobless claims climbed 8,000 from the prior week. So readers, if you are a bull, in the convoluted thinking of The Street, bad news is good news for the market.
We haven’t yet reached a point where I’m ready to go from a bear to beef menu, but if we get many more weeks like this, we’ll all be eating grade-A porterhouse while the bear slumbers.
Today’s Trading Landscape
Earnings to be reported include: Aracruz Celulose S.A., Biofuel Energy Corp, Finish Line, Hellenic Telecommunications, Intertape Polymer Group, KB Home, KHD Humboldt Wedag Int’l Ltd, MI Developments, Nexxus Lighting, Sadia S.A., Sinopec Shanghai Petrochemical Co Ltd, and Xinyuan Real Estate Co Ltd.
The economic reports due today are the February Personal Income (the consensus expects a 0.2% drop), February Personal Spending (the consensus expects 0.3%), and End-March Reuters/Univ Michigan Sentiment Index (the consensus expects 57).
Late news: Key bankers will meet with President Obama today. The administration will raise fuel standards for autos.
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Sam Collins is a registered, fee-based portfolio manager who may be contacted at samailc@cox.net. You can also check out an archive of some of his most recent market outlooks by clicking here.
