March madness: Stocks on the rise
It was the best monthly percentage gain since October 2002, but prices are still below their peak.
The long bear market may not be over, but Wall Street yesterday finished its best month since the downturn began with another gain.
All three major market indexes rose solidly in March - nearly 8 percent last month for the Dow Jones industrial average, more than 8 percent for the Standard & Poor's 500 and nearly 11 percent for the Nasdaq.
Even with last month's rise - prompted by some economic reports that were not as awful as feared, corporate earnings announcements and economic rescue steps taken by the federal government - stock prices still are well below their peak of October 2007, when the bear market started.
The Dow industrials, for example, are down 6,556 points since then.
Nonetheless, March was the Dow's first winning month since August, and the percentage gain was its best since October 2002.
"There are some very high-quality companies out there available at reasonable valuations," said Michael Shinnick, a money manager in South Bend, Ind., for Wasatch Advisors Inc. The market's retreat in the last 17 months has "taken down the good, the average and the bad."
Yesterday, stocks closed off their highs from earlier in the day but resumed a three-week rally that has brought the Dow industrials up a total of 16 percent since hitting their lowest level in 12 years on March 9.
The market came off a two-day pullback as stocks took a breather Friday and Monday from their recent surge driven by optimism that U.S. banks may be emerging from the worst of a lending crisis.
The Dow yesterday closed up 86.90 at 7,608.92. The broader indexes also gained, with the S&P 500 rising 10.34 to 797.87, and the Nasdaq composite up 26.79 to 1,528.59.
Technology and financial shares led the rally as large investors loaded up on rising stocks in order to report strong holdings at the end of the first quarter, which ended yesterday. Such buying is often called "window dressing."
Investors shrugged off the day's lackluster economic data and snatched up some of the biggest names in technology and banking including Google Inc., International Business Machines Corp., Bank of America Corp. and Citigroup Inc.
Financial services companies are likely to get another dose of good news later this week. The Financial Accounting Standards Board is widely expected to ease accounting rules that require companies to list their assets at current market values.
Advancing issues outnumbered decliners yesterday by more than 3 to 1 on the New York Stock Exchange, where volume came to 1.64 billion shares.
The window dressing came from institutional investors not wanting to end the quarter with large amounts of cash. So they loaded up on stocks they think have good prospects.
"Technology, of all the S&P sectors, is the only one that is up on the year," said Craig Peckham, an analyst at Jefferies & Co. "If you're going to try to window dress anywhere on the last day of the quarter, technology is a good place to start."
Technology shares got a lift from a deal between The Walt Disney Co. and Google that will allow Google's video site YouTube to show short-form videos from Disney's ABC and ESPN networks. Disney shares rose 31 cents to $18.16, while Google gained $5.37 to $348.06.
Also in technology, IBM rose $2.37 to $96.89.
Among financials, Citigroup was up 22 cents to $2.53, and Bank of America gained 79 cents to end at $6.82.