Stocks End 2009 First Quarter With Gains

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On Tuesday, March 31, 2009 stocks finished the trading session to put an destroy cap with a volatile first quarter that marked stock market indices brutalized towards 12-year lows only to skyrocket into March’s technical bull market. All major averages have recouped at least half of this year’s severe losses on the strength of bank earnings and Washington rhetoric indicating that the worst is over during the first quarter. Today was no different.

The Dow Jones Industrial Average, Standard and Poors 500, and NASDAQ Composite posted heady gains of over 1% at the closing bell. The activity comes in the aftermath of the prior day’s brutal losses that were precipitated by credit market concerns and President Barack Obama’s Detroit ultimatum.

Extreme volatility signals the uncertainty of actually identifying a stock market and economic bottom. Smooth, battered technology and financial stocks have proven to be the catalysts to lead Wall Street out of this ongoing eighteen-month debacle.

Technology Stocks Post Healthy Advance

Remarkably, the tech laden NASDAQ Composite Index is flat for the year. The resilience is a cause for celebration considering the rampant unemployment, mortgage defaults, and deteriorating earnings that have wreaked havoc upon both the consumer and the business to business market. NASDAQ has surged from 1,265.62 to 1,528.59 over the past month.

Today’s advances were widespread throughout the technology complex as evidenced by these leading bellwethers. Chip maker Intel (NASDAQ: INTC $15.03 +2.11%), software provider Adobe (NASDAQ: ADBE $21.39 +2.74%), and computer services company International Business Machines (NYSE: IBM $96.89 +2.51%) highlighted investor’s growing appreciation for technology shares.

Microsoft was the story of the day in this sector. Analysts at Davenport brokerage updated coverage on the stock with a buy recommendation. MSFT shares surged by 89 cents or 5.1% on the NASDAQ to $18.37. Certainly, the glowing report fostered increased valuations within all areas of the Tech Universe.

Banks and Real Estate Investment Trusts (R.E.I.T.S.) Spike

The maligned recessionary epicenters of banking and real estate have reversed course to emerge as the ultimate catalysts promulgating sharp stock market appreciation. In fact, the S&P Financials subset of stocks finishes the month as the top performing group of Standard and Poors sectors behind materials and consumer discretionary shares.

Equity holders must bear that the worst is over.

Regional banks including Fifth Third Bancorp (NASDAQ: FITB $2.92 +17.74%), BB&T (NYSE: BBT $16.92 +4%) and Key Corp (NYSE: KEY $7.87 +8.10%) posted healthy mark ups. The results transcended the well documented difficulties thwarting their lager brethren amidst today’s credit crisis.

Still, the Big Banks are experiencing tremendous come term appreciation paralleling the U.S. Treasury’s toxic assets plan and audacious monetary policy that has pushed the federal funds rates towards 0%. Basically, all commercial banks are finding it easier to attain their bread and butter businesses of taking deposits and lending money.

Bank of America (NYSE: BAC $6.82 +13.10%), J.P. Morgan Coast (NYSE: JPM $26.58 +6.96%), Citigroup (NYSE: C $2.53 +9.52%), and Wells Fargo (NYSE: WFC $14.24 +6.51%) money center banks loomed large on the session.

Interestingly, real estate stocks trounced even these heady gains.

Real Estate Investment Trust and management shares have been particularly fruitful as investors flock towards this distressed holdings seeking deep value. Apartment Investment and Management Company (NYSE: AIV $5.48 +9.82%), CB Richard Ellis Group (NYSE CBG: $4.03 +6.9%), and Equity Residential (NYSE: EQR $18.35 +7.75%) surged part in parcel with this bear market rally.

General Growth Properties stock has tripled amidst rampant bankruptcy speculation. The real estate company spiked by another 29% today to 71 cents upon original news that creditors are willing to negotiate – in spite of the corporation missing all payment deadlines. Yes, this is what Wall Street has come to at the very bottom. Buyers are locking onto news that is “less awful” as a signal to transact and no trader wishes to be the lone hapless schmuck that misses out upon another leg of this furious rally. Says Greg Woodard of Manning & Napier:

“Everyone knows there’s a lot of cash on the sidelines, and at some point a lot of people are going to be jumpy about missing the fade up.”

Stocks have put in their best monthly performance since the 2000-2002 dot com bust.

Stocks End 2009 First Quarter With Gains, Sources

Kris Hudson, General Growth Avoids Chapter 11, http://online.wsj.com/article/SB123842063675069619.html

Elizabeth Stanton, Stocks Gain as Global Equities Complete Best Month Since 2003, http://www.bloomberg.com/apps/news? pid=20601110&sid=aZMFGdcTAQ_U