Issue link: https://www.epageflip.net/i/82014
8A Daily News – Friday, September 7, 2012 NEW YORK (AP) — The last time the stock market was this high, the Great Recession had just started, and stocks were pointed toward a headlong descent. market moved swiftly in the other direction. The Dow Jones industrial aver- age hit its highest mark since December 2007, and the Standard & Poor's 500 index soared to its highest level since January 2008 in a rally that seemed destined to mark a milestone: Amer- ican stocks have come almost all the way back. A long-anticipated plan to support struggling coun- tries in the European Union provided the necessary jolt, and the gains were extraor- dinarily broad. All but 13 stocks in the S&P index were up. European markets surged, too. ''There's just a sea of But on Thursday, the Rally lifts stocks back to pre-recession levels Wall Street bankruptcy, banks stopped lending to each other and investors began dumping stocks in earnest. October in an election year, voters returned the sitting president to the White House 80 percent of the time, according to a study by S&P Capital IQ. By March 2009, the S&P had dropped 57 per- cent from its high to hit a 12-year low of 676. Since then, the index has been on an impressive if often bumpy climb. Helping to power it was unprecedented support from the Federal Reserve, which critics say has reignited a dangerous gam- bling spirit among profes- sional investors, and record profits at big U.S. compa- nies. green,'' said JJ Kinahan, TD Ameritrade's chief derivatives strategist. ''It's pretty fun.'' At the start of 2008, the U.S. economy was already a month into recession, though most people scarce- ly knew it at the time. The S&P had recently hit an all- time high, and the unem- ployment rate was 5 per- cent, compared with the current 8.3 percent. the investment bank Bear Stearns collapsed under the weight of bad mortgage bets, and investors began to sell. In September, the full financial crisis took hold as Lehman Brothers filed for Then, in March 2008, Although stocks have rebounded, the broader economy is still lagging. But Barry Knapp, head of U.S. equity strategy at Bar- clays Capital, said stocks tend to anticipate the future economy rather than reflecting current condi- tions. So the signs are good. ''It can be a misleading forecasting tool, but some- times it's telling you some- thing significant,'' he said. ''It's entirely possible the stock market is telling us that there is a better eco- nomic environment out there.'' So could the rally help President Obama? A num- ber of recent studies have connected a rising stock market to improved odds of re-election for the incum- bent president. Since 1900, when the S&P 500 has posted gains from July to Calendulas, Pansies, Violas Flowering Cabbage & Kale, Asters Chrysanthemums and Snap Dragons BEAUTIFUL FALL COLOR PLANT Coming Soon ANNUAL FALL SALE Sept. 21st - Sept. 30th 40% Off All 1-gal. Size & Larger! "Start your Shopping List Now!" 8026 Airport Road, Redding I-5 North, Exit #637, Rt. on Knighton, Rt on Airport Located 1 mile south of the Airport WYNTOUR GARDENS 365-2256 (Next to Kents Mkt) Open Mon-Sat 8-5 & Sunday's 10-4 wyntourgardens.com Facebook But no modern presi- dent has faced re-election when unemployment was so high. President Jimmy Carter was bounced from office in 1980 when unem- ployment was 7.5 percent. If you started off 2008 by putting $10,000 in the S&P 500, the benchmark for most stock funds, you would now have $10,600, thanks to dividends. That's assuming you could stom- ach the ride. Your initial investment fell to $9,840 six months later, then plunged to $6,300 by the following January. Starting in 2010, com- panies began generating higher and higher profits despite an anemic U.S. economic recovery. In fact, companies in the S&P 500 increased net income by double-digit percentages over eight quarters in a row through the end of last year — a stretch that has sur- prised even Wall Street stock analysts, who are normally criticized for being too optimistic. The way companies achieved that is familiar to any of the millions of Americans who've lost a job in recent years: Busi- nesses cut workers, used technology to run more efficiently, slashed spend- ing and squeezed remain- ing staff. a few roadblocks, however, most notably in the sum- mer of 2011, when Con- gress was squabbling over raising debt limits and fear was mounting that the U.S. could be headed into anoth- er recession. Over one four-day stretch in August, the Dow rose or fell by 400 points each day, the first time that has happened. The S&P 500 ended flat for 2011. Then earnings rose again this year, fears over European debt crisis reced- ed and stocks soared again. For the first three months of 2012, the Dow was up 8 percent and the S&P 12 percent, in each case the best start since the great bull market of the 1990s. The question now is whether big companies can continue to post record profits. The immediate out- look has no shortage of potential obstacles. The U.S. economy grew a tepid 1.7 percent in the April-June period, less than half the pace of late last year. countries in Asia also helped. Companies in the S&P 500 now generate 30 percent of their sales from overseas, Knapp said. The market's rise did hit economies, like Brazil's and China's, are slowing. And many countries in the 17-nation eurozone are in recession. Big overseas 1,432.12. The Dow Jones industrial average surged 244.52 points to 13,292. The Nasdaq composite index also reach a mile- stone, gaining 66.54 points to close at 3,135.81, its highest level in 12 years. Germany's DAX and Sales to faster-growing On Thursday, the chief economist of the Organiza- tion of Economic Coopera- tion and Development said he expects even power- Over 25 years of experience The North State's premier supplier of stoves STOVE JUNCTION Tony & Carmen Kelley 22679 Moran Road Corning, Ca 96021 530-824-2195 Fax: 530-824-0748 It's HOT now! But don't get left out in the 5A>6! Serving Butte, Glenn & Tehama Counties Tues-Sat 9am-5pm • Closed Sun & Mon 22825 Antelope Blvd., Red Bluff 530-528-2221 • Fax 530-528-2229 www.thestovejunction.com AUTO ROUTE DRIVERS WANTED Corning area HELP WANTED Must be 21 or older & bondable. Call or apply in person Circulation Dept. Red Bluff Daily News (530) 527-2151 ext 128 DAILYNEWS RED BLUFF TEHAMACOUNTY COMPLETE AUTO REPAIR recommened 30K, 60K, 90K SERVICES AT LOWER PRICES All makes and models. We perform dealer Smog Check starting at$ Pass or FREE retest 527-9841 • 195 S. Main St. (most cars and pick-ups) 2595 + cert. As if that's not bad enough, the dollar has strengthened against major currencies recently. That makes U.S. products sold in foreign currencies more expensive, cutting into overseas revenue. Thursday's rally got momentum after the presi- dent of the European Cen- tral Bank unveiled a new program to buy govern- ment bonds from the region's struggling coun- tries with the aim of lower- ing their borrowing costs. Mario Draghi said the pro- gram will have no set limit on how much it can buy. That was just what house Germany to fall into recession by the end of the year. investors needed to hear. The S&P 500 index jumped 28.68 points to France's CAC-40 each ral- lied 3 percent. The gains were even bigger in Spain and Italy, the two largest countries to become caught up in the region's long-run- ning government debt cri- sis. Spain's benchmark index soared 5 percent, Italy's 4 percent. Traders shifted money out of U.S. Treasury bonds, considered one of the world's safest places to stash money, and the drop in demand lifted yields. The yield on the 10-year Treasury note rose to 1.67 percent, up from 1.60 per- cent late Wednesday. In an encouraging sign for the American job mar- ket, a report from the pay- roll processor ADP said businesses added 201,000 jobs last month, the most reported by the survey since March. Separately, the Labor Department said the num- ber of people applying for unemployment benefits fell by 12,000 last week to 365,000. That figure won't affect the August jobs report, due out Friday, but could be a sign of a better hiring this month. Even before Thursday's surge, the stock rally has been one for the record books. investment strategist at Wells Fargo Capital Man- agement, published a report last month showing that stock prices have more than doubled in the 3 1/2 years since hitting a reces- sionary low in March 2009. That surpasses every post- World War II rally after a recession over a similar period. ''We've been told from the start that this stock mar- ket was going to be low return and high risk, but it's turned out to be the best ever,'' Paulsen said Thurs- day. ''Fear was way over- done.'' Jim Paulsen, chief The