It’s OK to look at your investment statements again
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Go ahead -- check your 401(k) this weekend. You deserve some good news.
Stock markets worldwide mostly racked up another week of gains, with Wall Street extending its winning streak to six weeks. That’s the longest stretch of green ink since the spring of 2007.
The Standard & Poor’s 500 index, which added 0.5% today to close at 869.60, was up 1.5% for the week. The index has rebounded 28.5% from its 12-year low March 9.
Other market sectors -- including small and mid-sized stocks and emerging markets such as Russia and Mexico -- have staged even more impressive bounces over the last six weeks, as investors have become much more hopeful that the global economy is in the process of bottoming.
Domestic stock mutual funds today reached a milestone, of sorts, according to data tracker Morningstar Inc.: Averaging the performances of all U.S. fund categories, the year-to-date net change now is zero -- meaning, the average fund has recouped all of its first-quarter losses.
That may or may not apply to your individual funds, of course. Among the largest portfolios, for example, American Funds’ Growth Fund of America is up 4% this year and Fidelity Magellan is up 8.4%. But Dodge & Cox Stock still is off 3.9%.
As for making up the losses of the last 12 months -- that will be like scaling a mountain.
Still, the market recovery of the last six weeks is better than no recovery at all. And it hasn’t just been built on blind faith. Plenty of economic reports have offered reason to be less pessimistic, if not actually optimistic. On Friday, the University of Michigan said its index of U.S. consumer confidence edged up to 61.9 this month from 57.3 in March.
The confidence data followed better-than-expected reports Thursday on new claims for unemployment benefits and mid-Atlantic manufacturing activity.
As for corporate earnings, first-quarter results for many major companies (General Electric Co., Nokia, Google Inc. and JPMorgan Chase & Co., among others) have been lousy -- but better than analysts’ worst fears. That’s all many market bulls were hoping to see.
Things also continue to improve in the credit markets. The average annualized yield on an index of 100 junk bonds fell to 12.4% on Friday, down from 12.52% on Thursday and the lowest since early October. The yield has tumbled from 14.88% on March 9.
Companies issued $3.1 billion in new junk debt this week, the most since at least July, according to Bloomberg News.
There still is enormous doubt on Wall Street that the stock market can sustain this rebound. The test of the rally’s staying power will be how doubting investors react when the next significant pullback occurs: Will they rush at the chance to get in at lower prices -- or stay away, convinced that they were right to remain on the sidelines all along?
-- Tom Petruno