It's getting safer to peek at your 401(k) account.
Wall Street today rallied for the fifth time in six sessions, leaving some key indexes up 15% or more from their recent lows and reversing another chunk of this year’s damage.
The Dow Jones industrial average rose 178.73 points, or 2.5%, to 7,395.70. The blue-chip Dow has gained 848 points, or almost 13%, since it hit a 12-year closing low of 6,547 on March 9.
The broader Standard & Poor’s 500 index jumped 3.2% to 778.12, bringing its gain since March 9 to 15%.
While the American International Group bonus fiasco is stealing the headlines, it’s having no damping effect on the stock market’s improved mood.
But some buyers 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 today said construction of new homes and apartments jumped 22% in February, though that was 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 14.2% since March 9. It got a boost today from Apple Inc., which gained $4.24, or 4.4%, to $99.66 after the company unveiled an updated operating system for its iPhone.
Not surprisingly, many Wall Street pros remain skeptical that this market upturn has staying power. Michael Nasto, senior trader at U.S. Global Investors in San Antonio, Texas, said trading volume has been unimpressive over the last week.
"I’d have to see more volume to believe this rally is for real," he said.
Still, investors’ mood has been so grim, 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 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 just a relative handful of strategists, so it can be skewed if one is particularly bearish. Still, not one recommends holding more than 61% in stocks at this point.
The mean recommended allocation to bonds is 39.1%, and the cash recommendation is 8.1%. Those have been great hiding places this year, but they'll lose their appeal to some investors if confidence rises that the stock market has, at last, hit bottom.
-- Tom Petruno
O'Neill's Prescription for the Financial System
I believe there is no hope for a market bottom until we embrace the companion ideas of truth and transparency. If I were in charge I would require each financial institution to classify their assets, by amount, into rating classes, beginning with AAA, and then down through the investment grade ratings. For assets such as credit card debt, I would have them post the dollar amounts, late pays and defaults and update the numbers every day. All of this would be posted on the Internet. For those assets the institutions claim cannot be properly valued, I would have them specify the amount and put them into a separate category called the quarantine account. The expectation would be that such assets would be held to maturity or until some event causes them to be reclassified.
The argument against doing this is that we can't handle the truth. However gruesome the truth may be, I believe the truth would give us a base to build on. ... We can't build a base so long as uncertainty causes the market to act as though there are no valuable assets at any financial institution.
The stress test idea is inside baseball. Is the market going to accept a judgment from people who have no credibility? I don't think so. If we, the people, had the facts I have called for, we could make an informed decision as to what action should be taken next. Without these facts one has to wonder, what is the basis for the actions that are being taken and contemplated by the people in our government?
70% tax on AIG bonuses?
WASHINGTONTWO US senators proposed on Tuesday a 70 per cent tax on bonuses for executives at companies that received money from the US$700 billion (S$1.07 trillion) financial bailout package in a bid to recover millions of dollars in bonuses paid to executives of American International Group Inc.
The proposal by Senators Max Baucus and Chuck Grassley, the Democratic chairman and the top Republican on the Senate Finance Committee, would require the companies to pay a 35 per cent excise tax and the other half would be paid by the recipient.
Record & Tape Traders in Catonsville to close tomorrow
Store recently relocated to smaller space on Frederick Road; other area locations will stay open The Record & Tape Traders store on Frederick Road had recently relocated but the smaller space was not working, company officials said. They said the chain's other area locations will stay open. The quirky store caters to music buffs looking for hard-to-find vinyl LPs and other music-related merchandise.
Gujarat moves SC over Bhopal waste disposal order
Cleaning up the Bhopal gas tragedy site has led to a new inter-state dispute between Madhya Pradesh and Gujarat with the latter moving the Supreme Court against a Madhya Pradesh court order stating that a part of the toxic waste from Bhopal can be disposed of in a Gujarat facility.
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