May 5, 2009 in Business

Wall Street’s big day reverses S&P’s ’09 losses

Associated Press
 

NEW YORK – Another big rally on Wall Street has erased the losses suffered by the Standard & Poor’s 500 index this year.

The S&P 500, the market barometer preferred by professional investors, is now up 0.4 percent for 2009. Many investments like mutual funds either mirror or are measured against the index.

Gains in housing, financial and materials stocks pushed the S&P up 3.4 percent Monday. The Dow Jones industrial average jumped 214 points but is still down 4 percent for the year.

Two new economic nuggets bolstered the case that the economy’s slide could be slowing and helped extend a two-month rally. Pending U.S. home sales increased more than expected to post their second straight monthly gain, while construction spending rose unexpectedly in March after five straight decreases.

Jerry Webman, chief economist at Oppenheimer Funds Inc., said stocks are rallying because investors aren’t fearful as they were months ago that the economy is headed for the abyss. Much of the economic and earnings news since the stock market hit 12-year lows in early March has been at least somewhat upbeat.

“There’s been this fear that every six months another shoe drops and maybe there isn’t a shoe in midair right now,” he said.

According to preliminary calculations, the S&P 500 index rose 29.72 to 907.24, its first close above 900 since Jan. 8. The index had previously only been higher in the first five trading days of the year.

The Dow rose 214.33, or 2.6 percent, to 8,426.74. The blue chips hadn’t closed above the 8,400 level since Jan. 13.

The Nasdaq composite index rose 44.36, or 2.6 percent, to 1,753.56. It is up 11.8 percent in 2009.

The market’s enthusiasm will be put to several tests this week, including the April employment report, one of the most closely watched economic indicators, which comes out on Friday.

Another concern for the market is the release Thursday of the results of the government’s “stress tests” on the 19 largest U.S. financial companies. Some analysts have worried in recent weeks that renewed anxiety about the state of the financial system could upend the market’s powerful two-month advance, which has sent the S&P 500 index up 34.1 percent since March 9.

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