For stocks, all news isn’t good news, but it’s good enough

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Every day, investors get a new chance to decide whether the economy glass is half full or half empty. Today, the vote was heavily in favor of half full.

Major stock indexes rose to their best levels of the spring rally after another round of mixed economic data and corporate earnings reports that were lousy, just not lousier than investors already had expected.

The Dow Jones industrial average closed up 95.81 points, or 1.2%, to 8,125.43, extending the six-week rally to a gain of 1,547 points, or 24.1%, from the 12-year low reached March 9.

The government reported that the number of Americans receiving unemployment benefits last week topped six million for the first time -- a gruesome piece of data. But the number of new benefit claims slid 53,000 to 610,000 last week from the previous week, the second consecutive decline.

The latest drop in claims may have been skewed by the Easter holiday. But for the glass-half-full crowd, the data offered another reason to believe that the recession is bottoming. Ditto for the Philadelphia Federal Reserve’s report today on its mid-Atlantic index of manufacturing activity in April, which came in much better than expected.

As for corporate earnings, first-quarter reporting season is shaping up exactly as market bulls had hoped: Many companies are reporting dismal results for the quarter, but are tempering the numbers with forecasts that are at least modestly hopeful.

Cell phone giant Nokia, for example, reported that first-quarter profit dived 91% from a year earlier, but said it still expected to meet previous profit margin forecasts for 2009 as a whole. The stock surged $1.52 to $14.88.

Harley-Davidson Inc. reported a 37% drop in quarterly earnings but said it still expected to ship between 264,000 and 273,000 cycles this year, in line with its previous forecast. The stock added 98 cents to $18.11. The shares are up 121% since March 5.

It’s entirely possible that corporate executives are in dreamland, and that any upbeat (or less-downbeat) projections will be blown out of the water in a matter of months.

The problem for disbelieving investors is that, the higher the market goes, the more afraid they become of staying on the sidelines.

‘The pressure on brokers who couldn’t bring themselves to buy four or five weeks ago is enormous,’ said Jeffrey Saut, chief investment strategist at brokerage Raymond James & Associates. The Standard & Poor’s 500 index is up 28% from its low on March 9.

Understandably, many investors now are praying for some kind of sharp reversal so they can get in at cheaper prices. But the market hasn’t give up much since the rally began on March 10. The biggest pullback in the S&P 500 was the 5.4% drop that occurred over the March 27 and March 30 sessions (a Friday and a Monday).

In the last 12 sessions, the S&P has closed lower on just three days.

Many analysts continue to assert that the market is ‘overbought’ and needs a rest. Itchy money on the sidelines can only hope they’re right.

-- Tom Petruno