By Kate Gibson
Buoyed by earnings that are proving better than dire forecasts,
U.S. stocks on Thursday moved toward solid April gains, with the
Standard & Poor's 500 index poised for one of its strongest
months in years.
"If we were to rally a bit today and close up 10% for the month,
that would make April 2009 among one of the best months for the
S&P in the post-war era," said Dan Greenhaus, an analyst with
Miller Tabak & Co., in a note.
Stocks lost their grip on an earlier rally, with the Dow Jones
Industrial Average (DJI) at 8,157.37, off 28.36 points, and
readying the blue-chip index for a 7.2% April rise. The S&P 500
Index (SPX) fell 2.10 points to 871.54, positioning it for a 9.2%
climb for the nearly finished month. And the Nasdaq Composite
(RIXF) gained 6.34 points to stand at 1,718.28, up 12.4% from its
March 31st close.
Energy and utilities weighed on the market as afternoon trade
commenced, with crude-oil futures erasing earlier gains to trade 6
cents lower at $45.82 a barrel. .
The energy sector was hit as Exxon Mobil Corp. (XOM), reported
first-quarter profits that fell below expectations, with shares of
the oil giant slipping 2.7%. .
Sector action
Materials and consumer discretionary shares fronted gains, with
those sectors fueled by results from companies including Newell
Rubbermaid Inc. (NWL). Its shares surged nearly 26% after the maker
of plastic storage containers said its first-quarter profit
declined 41%, but still beat expectations.
Should the S&P 500 conclude April 10% higher than where it
stood when the month began, the 30-day period would place in the
middle of the index's top 20 monthly gains since 1950.
Topping the list is October 1974, when the S&P 500 advanced
16.3%. The following month, the index declined 5.3%, but it was
20.5% ahead one year later, Greenhaus said.
"While the best 20 post-war months for the S&P saw gains of
11.79% in the year following, April 2009 is on the verge of being
one of the top 10 months the average gain after those 10 months has
been more than 13%. There is, of course, no guarantee, but both
March and April 2009 would rank among the top months for the
S&P and 85% of the time the index is higher one year later,"
said Greenhaus.
Historical trends bode well for the U.S. stock market in looking
10-12 months ahead, yet Greenhaus also cautions the shorter-term
picture remains a choppy one, given "low earnings visibility,
macroeconomic uncertainty and a volatile political
environment."
Another market observer noted the stock market often climbs a
wall of worry, and agreed that there remains plenty to be concerned
about, including unemployment, most recently at 8.5%, which many
expect will eventually climb to more than 10%.
"Some of the strongest and most enduring rallies in the stock
market's history have come in the face of very dour circumstances,"
said Michael Farr, president investment management firm Farr,
Miller & Washington LLC.