Stock Market Update

This week it has been the consumer who had Wall Street rallying. While the bear market may still have the bull by the horns, at least we are making some ground in the positive direction.

Today we saw better-than-expected earnings from big consumer brands like Best Buy, ConAgra Foods Inc. and Dr Pepper Snapple Group Inc. Many of these blue chippers shot the Dow average up 174 points Thursday to its highest level in six weeks. It has surged 21 percent since hitting a nearly 12-year low on March 9. And the technology based Nasdaq is now up 0.63 percent for the 2009 year. What a turn around from a month ago.

Much of the boost can be atributed to latest Obama’s administration announcements coupled with strong demand for government debt at the Treasury Department’s latest auction also lifted stocks by helping investors set aside recent nervousness about the government’s ability to fund its economic stimulus and financial bailout programs.

Nearly every day over the past three weeks has seemed to bring morsels of good news — first from the stricken banking sector and then in the form of stronger-than-expected economic data. But Thursday, solid reports from companies selling to the consumer came as a relief to investors anxious about first-quarter earnings, which will begin reporting sometime next month.

But with the end of the first quarter quickly approaching, money managers are fearful of missing out on the recent rally, the magnitude of which usually occurs over the course of many years.

One thing that many people are beginning to believe is that the market is going to bottom in 2009. In fact many economic “experts” have released many statement this week stating that they to feel the end of this recession is near. More political hype or fact based statements is uncertain.

Some numbers to report:

The Dow jumped 174.75, or 2.3 percent, at 7,924.56, its highest close since Feb. 12. It remains down 9.7 percent for the year, however, and down 44 percent from its record close of 14,164.53 in October 2007. The Russell 2000 index of smaller companies rose 18.78, or 4.4 percent, to 445.30.

About four stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 6.84 billion shares, down from Wednesday’s 7.53 billion.

Bond prices jumped after Thursday’s auction. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, fell to 2.76 percent from 2.79 percent late Wednesday. The yield on the three-month T-bill slipped to 0.14 percent from 0.15 percent.

The dollar rose against other major currencies. Gold prices rose modestly.

Oil reached a new high for the year, settling up $1.58 at $54.34 a barrel. 

Best Buy, the world’s largest consumer electronics retailer, said its fiscal fourth-quarter earnings fell 23 percent as it booked some one-time expenses. Stripping out those costs, results beat analysts’ estimates as the world’s largest consumer electronics retailer opened more stores, helping to boost sales. Best Buy rose $4.21, or 12.6 percent, to $37.67.

ConAgra, which owns the Healthy Choice and Peter Pan food brands, posted results that topped Wall Street’s expectations as people go out to eat less and cook more meals at home. The company also stood by its earnings forecast for the year. ConAgra shares rose $1.43, or 9.2 percent, to $16.99.

Dr Pepper Snapple Group Inc. also came in ahead of Wall Street forecasts. The company, which sells drinks such as A&W, Squirt and Hawaiian Punch, $621 million in the fourth quarter as it wrote down assets and spent heavily on restructuring and severance. But its adjusted profit was better than analysts expected. The stock rose $2.36, or 15.2 percent, to $17.87.

Meanwhile, government data indicated that the economy is still in decline, but at a less devastating pace than feared.

This type of advance would traditionally put the Dow in bull market territory (btw a bull market is defined as a 20 percent rise from a low point). But analysts are still hesitant to call the end of the bear market. This hesitation stems from a historic phenomenon known as a bear market rally that can quickly collapse in an uncertain economic environment. And rightfully so as I’m personally hesitant and questioning how long this rush will last. As I heard stated last week “”You might have stopped the flow of blood out of my body, but it doesn’t mean I’m going to survive.”