OK, let me get this straight: the dollar is falling, the budget is in massive deficit (same thing with the trade balance), Iraq has turned into a daily slaughterhouse, oil prices are in the mid-40s per barrel, and Christmas sales are so weak that
"desperation discounting" has started.
Yet, with all this seemingly bad news, the stock market is soaring. Today, it hit a 3 1/2 year high, supposedly because of an "overall positive outlook for the economy, lower oil prices, historically low interest rates as well as seasonal buying that tends to lift shares in the last weeks of the year."
Huh? What am I missing here? Is there a total disconnect between Wall Street and Main Street? How about Wall Street and reality? Is this mini-bull market based on a solid foundation, or is it simply setting us up for a bigger collapse down the road? And, by the way, does anyone have any advice regarding what the hell I should be doing with my money right now: pouring it INTO the bull market or pulling it OUT as fast as possible before it all falls apart? I mean, seriously, how long can this keep goin' on? Help!
Dow Jones Hits Three-Year High on Earnings Reports
By THE ASSOCIATED PRESS
Published: December 21, 2004
Filed at 6:29 p.m. ET
NEW YORK (AP) -- The stock market barreled higher Tuesday, sending the Dow Jones industrials to a new 3 1/2 year high as two Wall Street firms reported better-than-expected earnings and a brokerage gave tech bellwether Intel Corp. a ratings upgrade.
The Dow rose 97.83, or 0.92 percent, to 10,759.43. It was the best close for the Dow since June 13, 2001, surpassing the previous 2004 high of 10,737.70 set on Feb. 11.
Broader stock indicators also made substantial gains. The Standard & Poor's 500 index was up 10.80, or 0.9 percent, at 1,205.45, just below the 3 1/2-year high of 1,205.72 set on Wednesday. The Nasdaq composite index gained 23.06, or 1.08 percent, to 2,150.91, less than 12 points shy of last Wednesday's multiyear high.
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The good earnings news, along with the Intel upgrade, set a positive tone for the market throughout the session. Stocks also benefited from the traditional ``Santa Claus'' rally, as mutual funds and money managers shuffle their portfolios before the year ends.
``The company news that we've seen over the past few days has been, on balance, positive, and that's giving investors the courage to buy,'' said Hugh Johnson, chief investment officer for First Albany Corp. ``There's definitely some window dressing going on as well, where you have portfolio managers making sure they have good performing stocks in their portfolios before year's end. But for the most part, investors seem to be in a holiday mood.''
Stocks have climbed steadily since the presidential election, with good economic data and positive profit forecasts for 2005 assuring investors of further returns.
Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee, said the market was being driven by an overall positive outlook for the economy, lower oil prices, historically low interest rates as well as seasonal buying that tends to lift shares in the last weeks of the year.
``There's a lot of positives going on right now,'' Berman said. ``Even on the days where there has been bad news, the market has rebounded really well.''