Economic Outlook: Portfolios plump up

On Monday, the S&P jumped 29.72 points, but the long-term gains are more noteworthy.

The index the index that reflects a more diverse portfolio than rival indexes, was up 0.44 percent for the year, all the more startling because it hit a 12-year low on March 9, less than two months ago.

The rally has its standouts, including Sprint Nextel, up 173 percent for the year and Ford Motor Co., which separated itself from its rival U.S.

automakers by not accepting government assistance. Ford is up 158 percent since Jan. 1, The New York Times reported Tuesday.

The rally has laggards, too. Banks as a group, gained 12.55 percent Monday, with Bank of America up 19.31 percent and Citigroup Inc. up 7.74 percent, but Citigroup is down 52 percent and Bank of American down 26 percent for the year.

Closing at 8,426.74, the Dow Jones industrial average is 4 percent down for the year. The Nasdaq composite index is up 11.8 percent since January 1. Both indexes made smart gains Monday.

The European Commission said growth in the 16-member Eurozone would contract twice as fast as previously expected, but the FTSE index in London also managed a comeback, drawing to within 106 points of break-even for the year with a 119-point gain in midday trading Tuesday.

On Monday, European Commission analysts issued dire warnings that unemployment would likely rise in the Eurozone to 11.5 percent with productivity contracting 4 percent in 2009, more than twice as fast as their previous estimate of a 1.9 percent drop.

Another 8.5 million people in the Eurozone were predicted to lose their jobs by the end of 2010, the commission said.

As the U.S. stock market gained, the government said the gross domestic product dropped 6.1 percent in the first quarter.

An increasing number of analysts, however, indicate that the recession that began in December 2007 is turning a corner.

"The fact that we're not going down and not correcting is important," Richard Sparks, vice president of research at Schaeffer's Investment Research told the Times. "It shows the persistence of the rally."

Mutual fund manager Thomas Forester put it succinctly. "You like to make money instead of lose money," he said. "It feels better, huh?"
Asian markets closed higher Tuesday. The Hang Seng in Hong Kong was up 0.3 percent. The Singapore Straits Times was up 2.25 percent. The S&P/ASX in Australia gained 0.19 and the Nikkei 225 in Japan gained 1.69 percent.

In midday trading in Europe, the FTSE 100 in London was up 2.87 percent. The DAX 30 in Frankfurt gained 0.27 percent. The CAC 40 in Paris was up 0.33 percent.

Copyright 2009 by United Press International.