The bull takes another run on Wall Street

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

The U.S. economy may be stuck in stop-start mode, but it’s been nothing but go-go on Wall Street the last few days.

All three of the major U.S. averages — the Dow industrials, the S&P 500 and the always exciting Nasdaq composite — capped a four-day win streak today by closing at new 2009 highs. The Dow, which closed up 155.91 points at 9,505.96 (its first close above 9,500 since Nov. 4), is now up almost 17% from its early July doldrums, while the S&P 500, which jumped 18.76 points today to 1,026.13 and the Nasdaq, up 31.68 to 2,020.90, have notched similar gains.

As this blog’s jefe, Tom Petruno, observed yesterday, Wall Street’s buoyancy this week in the face of sharply higher oil prices and a scary sell-off in China has baffled many pundits. CNBC has been flashing charts of the VIX — a measure of stock price volatility — with a frequency usually reserved for Jim Cramer’s market musings.

The catalyst for today’s rally appeared to be encouraging words from Fed Chairman Ben S. Bernanke, who said “the prospects for a return to growth in the near term appear good.” Bernanke, speaking at the Fed’s annual conference amid Wyoming’s Grand Teton mountains, did warn that the ongoing credit squeeze is posing a challenge to consumers and businesses alike.

And that worries many analysts, who like to note that any rebound not accompanied by a strong revival in consumer spending is unlikely to be of the Charles Barkley variety.

“Consumer spending normally is the driver of recoveries at the beginning,” Bob Baur, chief global economist at Principal Global Investors, told the Associated Press. “That’s not happening this time.”

“At some point, the market is going to ask to see more than just mixed data,” he said. “It’s going to want to see some real jobs produced and an end to job losses and some validation that the consumer isn’t going to stay in a slump.”

Maybe housing will ride to the rescue, although that crucial sector has typified the good-news, bad-news character of the economy these days. Today, the news was good: The National Assn. of Realtors said sales of existing homes rose a more-than-expected 7.2% last month to a seasonally adjusted annual rate of 5.2 million, up from a pace of 4.9 million in June.

It was the fourth straight monthly increase and the highest level of sales since August 2007. The rise in sales, however, came amid a sharp decline in home prices.

Oil, meanwhile continued its recent ascent, rising $1.35 to a 2009 high of its own of $73.89 a barrel in New York trading. That helps energy stocks and the cadre of investors playing crude futures, but makes most everyone else mad — not to mention raising inflation fears and leaving a little less in the wallet to blow on those new “premium” Gap jeans.

So you can be forgiven if the market’s 50% surge over the last six months leaves you with visions of Wile E. Coyote a few feet beyond the edge of the cliff, running (literally) on air and afraid to look down. Hopefully, the “near term” that Big Ben spoke of today will be long enough to get us to the other side of the canyon.

-- Martin Zimmerman