NEW YORK — April was Wall Street’s best month in nine years — offering some of the most powerful evidence yet that maybethe economy is about to begin a turnaround.
The Standard & Poor’s 500 index, considered the most reliable measure of the broader market, climbed 9.4 percent in April, its best performance since March 2000, the peak of the dot-com bubble. The Dow Jones industrial average shot up 7.4 percent in April, on top of a 7.7 percent gain in March.
That’s more than a relief for investors — it’s a potential economic indicator, because the stock market tends to get back on its feet before the economy does.
In downturns over the past 60 years, the S&P hit bottom an average of four months before a recession ended and about nine months before unemployment hit its peak.
"The market is saying that the economy would hit its trough this summer,” said Al Goldman, chief market strategist at Wachovia Securities who has spent 50 years monitoring Wall Street.
Are things improving?
Even with the gains in March and April, the Dow is still down 42 percent from its peak in October 2007, and the S&P 500 index is off 44 percent.
Stocks mostly held steady Thursday, the same day that Chrysler filed for bankruptcy reorganization. Only two months ago, a more jittery market would have plunged if one of the Big Three said it couldn’t pay its bills.
U.S. stocks gained nearly $1 trillion in value in April alone. And the S&P’s March-April gain of 18.7 percent is its best two-month rise since 1975.
The rally began in March when Citigroup surprised investors by announcing it had made money in the first two months of the year. Other banks followed suit, and last week many big banks posted results that weren’t as bad as feared. In April, economic readings on home construction, retail sales and orders for manufactured goods improved or at least didn’t slide as quickly as they did during the meltdown last fall.
But sometimes the market speaks too soon.
For example, it jumped 20 percent from late November to the start of January only to slide to new lows by early March when additional bad economic news arrived.
by the associated press
The Standard & Poor’s 500 index, considered the most reliable measure of the broader market, climbed 9.4 percent in April, its best performance since March 2000, the peak of the dot-com bubble. The Dow Jones industrial average shot up 7.4 percent in April, on top of a 7.7 percent gain in March.
That’s more than a relief for investors — it’s a potential economic indicator, because the stock market tends to get back on its feet before the economy does.
In downturns over the past 60 years, the S&P hit bottom an average of four months before a recession ended and about nine months before unemployment hit its peak.
"The market is saying that the economy would hit its trough this summer,” said Al Goldman, chief market strategist at Wachovia Securities who has spent 50 years monitoring Wall Street.
Are things improving?
Even with the gains in March and April, the Dow is still down 42 percent from its peak in October 2007, and the S&P 500 index is off 44 percent.
Stocks mostly held steady Thursday, the same day that Chrysler filed for bankruptcy reorganization. Only two months ago, a more jittery market would have plunged if one of the Big Three said it couldn’t pay its bills.
U.S. stocks gained nearly $1 trillion in value in April alone. And the S&P’s March-April gain of 18.7 percent is its best two-month rise since 1975.
The rally began in March when Citigroup surprised investors by announcing it had made money in the first two months of the year. Other banks followed suit, and last week many big banks posted results that weren’t as bad as feared. In April, economic readings on home construction, retail sales and orders for manufactured goods improved or at least didn’t slide as quickly as they did during the meltdown last fall.
But sometimes the market speaks too soon.
For example, it jumped 20 percent from late November to the start of January only to slide to new lows by early March when additional bad economic news arrived.
by the associated press
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