In a week marked by mixed housing news, a major move up in oil prices and what many assumed would be an somewhat anticlimatic Fed policy meeting, stocks rallied as if the heady ways of the record-breaking days of late 2006-2007 were back on Wall Street.
The Dow opened the week in style with a 115-point gain -- at the time, its second biggest of the year -- with nary a second in the red for the day, as a spate of deals spuirred investors.
Tuesday brought a gain half that size. Interestingly , volume on both days was below the three billion shares of recent weeks and closer to the average turnerover before the Feb. 27 selloff.
The sizable back-back gains were unusual for the market going into a Fed meeting.
Fed To The Rescue
Wednesday brought the typical narrow trading range for most of the session, but the conclusion of the two-day March FOMC meeting yielded a decision and policy statement that in keeping with the Ben Bernanke Fed took investors by surprise -- in a more than pleasant way, this time. Volume surged, as well, reaching about 3.2 billion shares
The Dow surged 159 points -- posting its second triple-digit gain of the week and biggest in eight months -- after investors concluded that the FOMC had moved to a neutral bias because it dropped policy language about any further tightening, even though it acknowledged that the "predominant policy concern remains the risk that inflation will fail to moderate as expected."
The S&P 500 and the Nasdaq Composite power back into possitive territory, while the Dow hits ends the session just below break-even on the young year on a day where -- fittingly enough -- the Shanghai market capped its comeback from February's 11% selloff by closing at a new record high.
Tail Wind Blows On Wall Street
Some pundits called Wednesday a relief rally, but on the fourth day the markets rested, with the blue-chip index bouncing around the break-even line.The mortgage industry crowded the news agenda Thursday. In Charlotte, North Carolina Fed bankers were focusing on risk at a credit markets symposium while in Washington, DC, the Senate Banking Committee hed hearings on the subprime meltdown. That depressed financials, while Motorola's severe profit warning late Wednesday weighed on the tech sector.
Nevertheless, the Dow managed a small gain, extending its winning streak to four sessions, adding to investor confidence that the worst is over.
Friday brought another gain, even as oil prices made a run at $63 a barrel. The Dow 30 traded in a tight 60-plus point range, closing at 12,481.01, a fraction above its 2006 closing level of 12,463.15.
As the Dow caps its best weekly gain in eight months, traders are already looking ahead to a flood of economic reports including the first data for March in the form of the Chicago Purchasing Managers Index, as well as a key inflation gauge for the Fed, the PCE index. First-quarter earnings season will aslo loom with Alcoa scheduled to report Tuesday, April 10.