Wall Street is narrowly mixed in early trading

It's getting safer to peek at your 401(k) account.

Although the American International Group Inc. bonus fiasco is stealing the headlines, it's having no damping effect on Wall Street's newly elevated mood.

The stock market Tuesday reversed another chunk of this year's damage, recording its fifth gain in six sessions and leaving some key indexes up 15% or more from recent lows.

The Dow Jones industrial average rose 178.73 points, or 2.5%, to 7,395.70. The blue-chip gauge has gained 848 points, or 13%, since it hit a 12-year closing low of 6,547 on March 9.

Broader indexes rose more sharply Tuesday. The Standard & Poor's 500 index jumped 3.2%, bringing its gain since March 9 to 15%. The Nasdaq composite index shot up 4.1%.

Wall Street had been primed for at least a short-term bounce after a deep dive in February and the first few days of March.

But some buyers also may be responding to glimmers of hope that the economy has stopped getting worse.

Investors seem to be encouraged by economic data that have been "horrible, but less horrible" than previous numbers, said Fred Dickson, market strategist at brokerage D.A. Davidson & Co. in Lake Oswego, Ore.

The government Tuesday said construction of new homes and apartments jumped 22% in February, albeit from extremely depressed levels in January.

The market's rebound last week was fueled in part by signs that consumer spending had stabilized in January and February after diving in the last four months of 2008.

Technology stocks, a classic bet on economic growth, have been leading the advance from last week's lows. The Nasdaq 100 index has risen 14% since March 9. It got a boost Tuesday from Apple Inc., which gained $4.24, or 4.4%, to $99.66 after the company unveiled an updated iPhone operating system.

Stocks in general may have gotten a lift Tuesday in anticipation of a statement today from Federal Reserve policymakers, who are holding their regular late-winter meeting. Although the Fed has no more room to cut short-term interest rates, it has hinted that it might begin buying Treasury bonds to help drive down long-term rates.

Yields on longer-term Treasuries had been trading in a narrow range in recent weeks, but the 30-year T-bond yield rose to 3.8% on Tuesday, up from 3.76% on Monday and the highest since November.

In commodities trading, crude oil futures added $1.81 to $49.16 a barrel, the highest close since Dec. 1. For investors looking for signs of an economic rebound, rising energy prices qualify as good news rather than bad news at the moment, traders say.

Yet many Wall Street pros remain skeptical that the stock market's upturn has staying power. Michael Nasto, a trader at U.S. Global Investors in San Antonio, said trading volume had been unimpressive over the last week. "I'd have to see more volume to believe this rally is for real," he said.

Still, with so many investors and analysts expecting the rally to soon fizzle, the "contrarian" view is that the market is likely to continue disappointing the bears and the cautious, for a change.

A weekly Bloomberg News survey of market strategists at major brokerages asks them for their recommended portfolio allocations to stocks, bonds and cash. In last week's survey, the mean recommended stock allocation was 51.5% -- the lowest since 1997.

The survey covers a relative handful of strategists, so it can be skewed if one is particularly bearish. Still, not one of the strategists in the latest survey advised holding more than 61% in stocks. In the last decade, the record high mean stock allocation was 72% in 2001.



Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World