NEW YORK — On March 9, 2009, it felt like the world was ending.
The Dow Jones industrial average had tumbled to a 12-year low of 6,547, and looked to keep plunging. A day later, Citigroup Inc. stopped the market’s drop with news that it was turning a profit. That began the stock market’s answer to the Great Recession: the Great Rebound.
The numbers are hard to believe. The Dow has rocketed 61 percent in a year. That’s the kind of gain that would normally come in five or six good years. The Standard & Poor’s 500 index — which is the basis for many retirement accounts and mutual funds — jumped 20 percent in the first 10 trading days after March low. It’s now up 68 percent.
And Citigroup? The bank that was hardest hit by the financial meltdown has seen its shares triple to $3.50.
There are still huge worries about jobs, deficits and the government’s role in propping up a shaky financial system. But the market’s climb means that, for now, investors are betting on a sustained economic recovery.
Here’s a by-the-numbers look at one of the most remarkable years in the history of the stock market.
— $5.6 trillion: Total gains in the stock market since March 9, as measured by the Dow Jones U.S. Total Stock Market Index, which tracks nearly all U.S.-based companies.
— $5.6 trillion: The amount that stocks are still down from October 2007, when the Dow peaked at 14,164.
— 83 percent: Amount the technology-dominated Nasdaq composite index is up since March 9.
— 98 percent: Number of stocks in the S&P 500 index that are up since March.
— 24 percent: Number of stocks in the S&P 500 index that are up since the market’s peak in October 2007.
— 129 percent: The average gain among financial stocks — the best-performing industry group in the S&P 500 index.
— 97 percent: The average gain among consumer-discretionary stocks, which includes retailers.
— 17 percent: The average gain among telecommunications services stocks — the worst-performing industry group.
— 1,701 percent: Gain in shares of Genworth Financial Inc. from 91 cents to $16.39, through March 5. The best performer in the S&P 500 index.
— 647 percent: Gain in a share of Ford Motor Co. from $1.74 to $13.00.
— 345 percent: Gain in a share of Bank of America Corp. from $3.75 to $16.70.
— 121 percent: Gain in a share of General Electric Co. from $7.41 to $16.35.
— 14 percent: Gain in a share of Wal-Mart Stores Inc. from $47.51 to $54.14.
— -56 percent: Drop in shares of MetroPCS Communications Inc. from $14.56 to $6.38; the worst performer in the S&P 500 index.
— -$1.55 billion: Net cash flow for stock mutual funds, representing the money put into funds minus the money taken out.
— $386 billion: Net cash flow for bond mutual funds.
— 18-20: The historical average for the Volatility Index of the Chicago Board Options Exchange, also known as the VIX, or the market’s “Fear Index.”
— 49.68: Where the VIX stood a year ago.
— 17.42: Where the VIX closed on March 5.
— $918: The price of an ounce of gold a year ago.
— $1,135.20: The price of an ounce of gold on March 5.
— 8.2 percent: Unemployment rate as of February last year.
— 9.7 percent: Unemployment rate as of February of this year.
— 726,000: Jobs lost in February last year.
— 36,000: Jobs lost in February of this year.
— $202.1 billion: Losses of the companies in the S&P 500 index in the final three months of 2008, a record.
— $132.7 billion: Estimated earnings of the companies in the S&P 500 index in the final three months of 2009.
— $1.26: The amount it cost to buy one euro a year ago.
— $1.36: The amount it costs to buy one euro now.
— 25.3: Consumer confidence a year ago — a record low.
— 46: Consumer confidence today.
— 90: Consumer confidence number that economists believe signifies a healthy economy.
— 5.15 percent: Average rate on a 30-year fixed mortgage last year.
— 4.97 percent: Average rate on a 30-year fixed mortgage now.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
This is just a bullish article that leaves out the details of a massive bailout and liquidity that has found its way into the stock markets.
How many really benefited by selling the highs in 2007 and buying the lows in March 2008?
Not noted is the fact that the DJI is only back to its 2000 peak. The S&P 500 is still well below its all time peak and the Nasdaq is more than 50% below its 2000 peak as well as the NIKKEI 225 some 80% below its 1989 peak (after their bubble).
Big deal that the stock market has had the largest gain ever following the trough of a recession. These wild swings are representative of huge instability with our economy, our financial system, and our spend thrift government.
What about the dollar? What about unemployment. So is the stock market forecasting recovery? or just a counter trend rally within the confines of a huge long term secular bear market?
Nothing’s really been healed…..just passing the costs onto the future taxpayers of America. And passing the costs onto all of us through a devaluation of the dollar.
Truth be told, I am much more worried and concerned in March 2010 than I was in March 2009.
This time last year my favorite investments of stocks, municipal bonds, TIPS and commodities were undergoing an irrational sell off during which I was thrilled, ecstatic even to buy them. I had lost hundreds of thousands of dollars in the down turn, but because of my young age, investing knowledge, and well thought out plan of a passive asset allocation based strategy, I felt these assets were significantly under-valued and bought large amounts of them, sacrificing even my emergency fund to acquire more all the way down to the March low.
At the time, I wasn’t concerned because my work volume and income kept rising, and for most of the above assets compared to the situation I felt like I was being handsomely rewarded for taking the risk inherent to investing in said stock, municipal bond, TIP and commodity asset classes.
Fast forward another year, and asset prices have bloated beyond recognition. While this is not a bad thing because from hundreds of thousands down at this time last year, I now can brag about having posted a positive lifetime investment return less than a year after the worst bear market in 80 years, my future returns look very bleak.
Last year I was liquidating cash and delaying consumption to buy up as many assets as I could afford. Now, values are so high and yields so low that my expected future returns once taking inflation and taxation into account will be very paltry. I have serious doubts about being able to increase my REAL purchasing power for the inconvenience of having deferred consumption over time.
Add to this that I work in a very stable, safe staple industry that is reputed as one of the most recession proof, and I am starting to see a 25-40% drop in business the last 3 months and I am panicked indeed.
The huge rebound are a side effect of the huge money on the sidelines jumping back in, impatient from earning 0% for the last 2 years. When you figure that unemployment is starting to drop mostly because people’s benefits are expiring and they fall of the radar screen, and the banks have >6 months of foreclosured properties they fear marketing lest they cause a total collapse of real estate prices, and you have a worrisome situation indeed.
There is nothing to take us out of this crisis. The house ATM has dried up, real wealth is being diluted at an alarming pace by printing presses running overtime, and most of the developed world has lost its manufacturing base which in the past it has relied on to muscle all the growth and recovery we have known the last 60 years.
This is a new setpoint. Prepare for a low return era during which we will see even very wealthy people’s standards of living fall precipitously. If someone who was financially prudent who invested wisely, works in a relatively safe job and did everything right like me is now starting to quake (only slightly, but still!), imagine everyone else who is leveraged to the hilt, working in do-nothing jobs and living paycheck to paycheck.
I am a lot more worried as of March 2010 than I was last year. This “recovery” is a pyrrhic victory.
Prepare for a very low return era where a lot will be in doubt, and few risks will be rewarded in name of distributing your money like the confetti our leadership acts like it is. ***SHUDDER***
If your point is everything is overly done I think your right. There is no where to go but back to dow 6000.