Wall Street makes upbeat start to 2009
Stocks rang in 2009 with gusto Friday, as the Dow Jones industrial average closed above 9,000 for the first time since early November in spite of glum news from the manufacturing sector.
It was the third straight day of gains for stocks, although Friday’s advance came as much of Wall Street was out on an extended New Year’s holiday.
Still, the market’s gains this week gave analysts reason to be optimistic for a continued rebound from last year’s wipeout.
“The front lines are no longer pounding with bad news,” said Robert Bissell, president of Wells Capital Management in Los Angeles. “There’s less headline pressure. There’s less selling pressure because we’re into a new calendar year. And as the days go by, we’ll get into an inauguration for a new president and that’ll bring hope.”
Added Dan McMahon, head of equity trading at Raymond James & Associates in New York: “There is a lot of cautious optimism.”
The Dow Jones average has quietly risen almost 20% from its Nov. 20 low as money managers who dumped stocks in late 2008 try to reestablish positions in some beaten-down shares.
Friday’s rally was spearheaded by one of those bottom-dwellers: General Motors. The automaker’s shares jumped 45 cents, or 14%, to $3.65 after the company received the first installment of its loan from the federal government. Rival Ford booked a 7% gain, rising 17 cents to $2.46.
Shares of consumer-discretionary companies, including retailers, also saw their fortunes improve. Nordstrom added $1.24 to $14.55, a 9% jump. Saks bested that with a 15% increase, adding 67 cents to $5.05.
Best Buy was also in the New Year’s parade, rising $1.05 to $29.02. Office Depot marked its calendar with a 17% gain, adding 52 cents to $3.50.
Crude oil climbed $1.74 to $46.34 a barrel, and energy stocks rose with it. Exxon Mobil picked up $1.81, or $2%, to $81.64 and Chevron posted a 3% gain, adding $2.55 to $76.52.
The major indexes all marched ahead. The Dow rose 258.30 points, or 2.9%, to 9,034.69, for its first close above 9,000 since Nov. 5. It was the Dow’s second-largest point gain ever for the first trading day of a new year.
The Standard & Poor’s 500 rose 28.55 points, or 3.2%, to 931.80. By comparison, the index started off 2008 with a clunker, plunging 221 points.
The tech-heavy Nasdaq composite index climbed 55.18 points, or 3.5%, to 1,632.21.
The so-called fear trade eased a bit as the yield on the 10-year Treasury note rose to 2.41% from 2.25% on Wednesday. (The markets were closed for the New Year’s Day holiday on Thursday.)
In economic news, the Institute for Supply Management said its much-watched manufacturing index had its worst showing for the month of December in 32 years. Bad numbers have become common during the yearlong recession, but this one was worse than expected.
Investors looked past that report, though, perhaps thinking the recent “Santa Claus” rally has legs -- especially with anticipation building over President-elect Barack Obama’s Jan. 20 inauguration.
Market pros are crossing their fingers that stocks are forming a base -- a foundation that could serve as a springboard for continued gains, if the economy isn’t hit with additional shocks.
Clearer signs of the market’s direction will emerge next week. Beyond that, fourth-quarter earnings will come out late this month, and if corporate bottom lines are weak, that could give investors an excuse to retreat.
Right now, stocks are still relatively cheap. Market bulls say investors should take advantage of the low prices to rebuild their portfolios, although few are expecting a surge of buying.
“It’s the start of something we’ll see all year long, where the news has been so bad nobody’s going to believe for quite a while that we’re going to recover,” Bissell said. “People panicked -- and got burned so bad because they panicked -- that it’ll take them a while to return.”
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tom.petruno@latimes.com
