FOR IMMEDIATE RELEASE
STOCK MARKET OFF TO ITS BEST SECOND-QUARTER START IN 70 YEARS-NO FOOLING!
Reno, NV (Marketmail) - April 1, 2008
What a way to start the second quarter! The stock market staged a big rally today with the Dow Industrials closing 391 points higher (+3.19%) to 12,654, the NASDAQ +83 points (+3.67%) to 2,362, and the S&P 500 +47 points (+3.58%) to 1,370.
The main reason for the market's rally came when Lehman Brothers (LEH) and UBS (UBS) both issued new shares of stock to raise fresh capital and shore up their suffering balance sheets.
Both stocks were up sharply on the news, leading the financial sector to a huge gain for the day. But, really, this is just another short-covering rally.
There's a growing feeling on Wall Street that the worst of the credit crisis could be over-however, we respectfully disagree. We don't believe the financials are out of the woods yet. These stocks will be posting more mortgage write-downs as mortgage delinquencies continue to rise, and the entire housing sector will be underwater until 2009, at the earliest.
Another reason for today's big gains had to do with the encouraging news from the manufacturing sector this morning. Specifically, the ISM Manufacturing Index rose to a reading of 48.6 in March from 48.3 in February. Remember, any number below 50 in this index indicates manufacturing is contracting, but at least it's moving in the right direction!
The good news for fundamental investors like us is, as first-quarter earnings are announced, we expect to see the stock market rotate out of financials and homebuilders, which have been leading the overall stock market during the short-covering rallies, and refocus on stocks that have the best sales and earnings...
So if you're not already fully invested, we want to encourage you to consider doing so. We expect the Fed has one more 0.50% rate cut up its sleeves at the April 30 meeting, and that should really put the market in a good mood.
Navellier & Associates
Patrick O'Connor
Managing Editor, Marketmail
patricko@navellier.com |
