Stock Market

NEW YORK - Wall Street's wildest week since 2008 careened into another 400-plus point move for the Dow yesterday. This time, stocks shot up after investors saw small signs that the economy might not be headed into another recession. Fewer Americans joined the unemployment line last week, and a technology bellwether said that revenue could grow faster this quarter than analysts expected. The news pushed prices on long-term Treasuries down, and gold fell from its record high. The Dow Jones industrial average rose 423.37 points.

President Bush said today the United States remains the best place for investment despite signs of weakness in the economy and attractive interest rates abroad. "I think people see the United States still, regardless of what's temporary out there, as the safest haven for investment anywhere in the world," Bush told a news conference amid news that stock prices were tumbling across the world and fears of another drop in U.S. markets today. The Dow-Jones Industrial Average was falling in opening trading even as Bush spoke.

At Hatboro-Horsham High School, some students have made a killing on the stock market. "We have made almost $8,000 in nine weeks," boasted Tammy Schmitt, a member of a ninth-grade group. "We bought Amoco stock at $72 and sold it at $84," said Mike Lassoff, a member of a second group of ninth graders. Too bad it was only a game. The 10-week game, which ends today, was called - appropriately enough - The Stock Market Game. It was all part of a plan by Hatboro-Horsham social studies teachers Dan Maley and Tom Richards to teach their ninth- and 12th-grade social studies classes how to buy and sell stocks and how to calculate interest rates and brokers' fees.

The fundamentalists were in town last week, and we don't mean the Promise Keepers. No, the suits and ties filling the Grand Ballroom at the Park Hyatt at the Bellevue belonged to the Association for Investment Management and Research, which sets certification standards for stock analysts and investment managers-in-training. The association held a daylong boot camp at which brainy academics and graying industry veterans urged the next generation to remember - despite recent events - that stock prices are supposed to have a rational basis.

So Wall Street laid an egg yesterday, to paraphrase Variety's famous headline on the 1929 stock market crash. Don't panic. It wasn't that bad, and if you read, watch or listen to financial news, you knew that some kind of major, ahem, correction was expected. Still, far more Americans than ever before are invested in stocks these days, especially because of the rise of individual-directed retirement plans such as the 401(k). So the lessons that longtime and long-term investors learn are new to many, at least emotionally.

The shell-shocked stock market basked in relative stability this morning after two disastrous Mondays, and the volatile Dow Jones industrial average stayed within a narrow range. The key index of the nation's 30 prime industrial corporations fell more than 20 points at the opening but quickly recouped and flirted with the 2,000 level. By noon the Dow Jones average totaled 1,996.02 up 2.48 with a volume of 115,702,220. Broader market barometers were mixed. Market analysts said the market mood remained cautious but appeared to be improving, marked by the slow return of large institutional investors who had panicked after the historic Oct. 19 crash.

Stocks and bonds turned in another banner year in 1986, with the stock market up about 20 percent and many bonds providing investors with total returns of 10 percent or more. Can they do it again in 1987? Probably, say investment advisers. Although there are more clouds on the horizon than there were at this time last year, and a few strategists are waving yellow caution flags, the consensus is that the savvy investor stands to make a chunk of money this year. Two big questions hang over the investment outlook for the year: After four years of a bull market, how much longer and how much further can stock prices rise?

A jobless recovery lit rockets under the stock market exactly a year ago. Profits soared as corporations filled more orders with fewer bodies on the payroll. Today, those missing jobs weigh heavily on the stock market. Investors wonder who will buy cars, and computers, and airline tickets if the job market does not pick up. "You have to be careful what you wish for," John P. Waterman, chief investment officer of Rittenhouse Asset Management, of Radnor, said yesterday. "Consumer spending is two-thirds" of the economy.

Long after the Reagan deficits, the Gramm-Rudman amendment, and even Ollie North have been forgotten, the great stock market rally of the last five years will be remembered. Nothing in the post-war experience of the U.S. economy compares with the trebling of the stock market over this period. An investor holding the market portfolio has received a return of over 200 percent since August of 1982. Even the great bull market of the 1960s palls in comparison - the return from the trough to the peak in that market was 96 percent.

JPMorgan's surprise $2 billion trading loss prompted a sell-off in financial stocks Friday, with smaller declines across the broader market as investors decided this was more of a problem for investment banks than for other industries. Most of the 10 industries in the Standard & Poor's 500 index were flat or posted modest declines; financial stocks fell 1.1 percent. For that, the other investment banks could thank JPMorgan, America's biggest bank. The stock plunged 9.3 percent, dragging other banks with big Wall Street operations down with it. Morgan Stanley fell 4.2 percent and Goldman Sachs fell 3.9 percent.

Will the stock market adage "sell in May and go away" prove to be a profitable strategy again in 2012? Not according to one market prognosticator. For the last two years, selling in May would have helped investors. In 2010, the stock market peaked on April 23. And last year, it hit its high on April 29, according to research from Wells Capital Management, a division of Wells Fargo. In the first quarter of 2012, the S&P 500 gained 12.6 percent, its largest first-quarter gain in 14 years.

Diane Ravitch, education historian and pointed observer of the American educational scene, came to Philadelphia last week to speak at a math teachers' convention. She had read the Philadelphia School District's "Blueprint for Transformation," and she wasn't pleased. "If you really want to improve schools, you do something about teaching and learning," Ravitch said. "This is all shuffling deck chairs on the Titanic. " Call it reform if you'd like, but what Philadelphia's plan really proposes is privatization, Ravitch said.

NEW YORK - The zigzag in the stock market last week may leave you wondering queasily: Will this quarter build on the blockbuster gains from the start of the year or wipe them away? History suggests the winning streak will continue. Over the past 30 years, strong quarters like the one that ended in March have tended to be followed by more gains. Smaller gains, usually, but gains nonetheless. From 1982, the start of what some consider the modern era of investing, through the end of last year, there were 17 quarters in which the Standard & Poor's 500 index rose 10 percent or more.

NEW YORK - The bulls weren't bullish enough. The stock market just had its best first quarter in 14 years. The surge has sent Wall Street analysts, some of whose forecasts seemed too sunny three months ago, scrambling to raise their estimates for the year. "That it's up isn't surprising - it's the magnitude," says Robert Doll, the chief equity investment manager at BlackRock, the world's biggest money manager. Doll says that stocks could rise 10 percent more before the end of the year.

John White retired as a vice president of Orleans Homebuilders in 2002, as housing was starting to boom and long before it went bust. Now living in Florida, he e-mails me periodically with his thoughts about the real estate market. I don't consistently agree or disagree with his viewpoints, but I believe that continuing the dialogue about the current state of the housing and finance industries is too important an opportunity to pass up. White's most recent discourse: who and what caused the housing bubble to burst six years ago, which I will summarize to fit this space.

Cheryl and Jim Friedman, retirees in St. Louis, had two-thirds of their retirement money in the stock market in 2008. When the financial crisis struck that fall and stocks lurched up and down with nauseating speed, Cheryl, a former accountant, pulled the money out. Fearing that the next crisis was always around the corner, they have kept most of the money out. It's parked in a money-market account earning a meager 0.1 percent per year. The Friedmans watched in agony as stock prices doubled over the last three years.

NEW YORK - The stock market posted substantial gains Thursday as Greece closed in on a deal to restructure its debt and avoid a default. That overshadowed a small increase in unemployment claims last week. The Dow Jones industrial average closed up 70.61 points, or 0.55 percent, at 12,907.94. Two days of solid gains have erased about three-quarters of the loss from Tuesday, when the Dow fell 203 points, its biggest loss of the year. The close left the Dow up 97 percent on the eve of the third anniversary of its low point during the Great Recession.

The stock market reclaimed some losses from its biggest dive this year and returned Wednesday to its pattern of steady gains and stable trading. Reassuring reports on productivity and hiring overshadowed worries about the Greek debt crisis. Stock indexes made solid gains by midmorning after the government said oil refineries were operating at a faster clip than economists had expected. Oil refiners Valero Energy Corp. and Tesoro Inc. were among the biggest gainers in the Standard & Poor's 500. The Dow closed up 78.18 points, or 0.61 percent, at 12,837.33.

NEW YORK - Two signs of trouble elsewhere in the world pushed U.S. stocks lower Monday: slowing economic growth in China and a possible hitch in a deal to get Greece its bailout money. The Dow Jones industrial average closed the day down 14.76 points, or 0.1 percent, to 12,962.81. The Dow closed above 13,000 last week for the first time since May 2008. Much of the pessimism stemmed from China's premier, Wen Jiabao, who lowered China's target rate for economic growth to 7.5 percent from 8 percent, where it has stood for years.