Never Mind That Correction – Market Powers Higher Despite Growing Concerns
The S&P 500 closed today up 15 to 1468, marking a 6 1/2 year high. That’s 8 points higher than the most recent high close of 1460 on Tuesday February 20 – the week before the huge sell-off of February 27. To say it another way, the S&P 500 has recovered all its losses from the sell-off at the end of February, beginning of March, and then some.
The Nasdaq, at 2518, is only 7 points off its previous high close of 2525 on Thursday February 22 and the Dow, at 12720, 66 points from its recent closing high on Tuesday February 20. Like David Gaffen of the WSJ’s MarketBeat blog wrote earlier today: “Never Mind that Correction”.
The immediate cause was a .7% rise in retail sales in March (subscription required), according to the Commerce Department, and an upward revision of February from .1% growth to .5%. Large banks Citigroup and Wachovia also reported good earnings and Sallie Mae agreed to be bought out by some private equity firms for $25 billion.
I’d have to agree with Todd Leone, head of listed trading at Cowen & Co: “It doesn’t seem like there’s anything to stop the markets right now” (subcription required). Even with all the worries about slowing economic and earnings growth, the fallout in the housing and mortgage market, declining business capital investment and high inflation tying the Fed’s hands, the market seems to keep pushing higher. If all that isn’t going to stop it, what is?