Transcripts

Will April Shower The Markets With A Spring Rally?

PAUL KANGAS: The ongoing standoff between Iran and Britain ignited another big jump in oil prices today, topping $66 a barrel. Light sweet crude futures for May delivery surged $1.95 to $66.03, the highest level in seven months. Oil prices have skyrocketed more than 16 percent in the last two weeks on concerns that Iran's detention of 15 British soldiers could escalate and disrupt fuel supplies.

PAUL KANGAS: Oil was just one factor weighing on stocks in the first quarter. Now that March is almost over, investors wonder what lies ahead for the market. As Erika Miller reports, the start of spring is bringing new hope for stock investors.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: April showers bring May flowers, but the opposite is usually true for the stock market. Historically, stocks tend to bloom in April and get doused in May. According to the "Stock Traders Almanac," since 1950, April has been the best month for the Dow, with an average gain of 1.8 percent. April is the fourth best month for the S&P 500, posting an average increase of 1.3 percent. Standard & Poor's market technician Mark Arbiter predicts major market indexes could surge as much as 15 percent in the next three months.

MARK ARBETER, CHIEF TECHNICAL ANALYST, STANDARD & POOR'S: Part of this reason is because of the quick decline that we've seen. That creates very little resistance when the market goes back up. Part of the reason is also because of the high bearish levels of sentiment that we're seeing.

MILLER: Arbeter also points to a recent volatility study done by his firm. It found that periods of relative calm, like the eight months Wall Street saw up to February, were usually followed by big market swings.

ARBETER: Typically volatility is seen on the downside. But there are instances where volatility can pick up and help the move to the upside, which I think is going to develop.

MILLER: Others, including Tony Dwyer of FTN Midwest Securities, see fundamental reasons the market could power higher.

ANTHONY DWYER, EQUITY STRATEGIST, FTN MIDWEST SECURITIES: We think the month of April, the second quarter, the full year, are going to be terrific for stocks. We're going to have positive corporate profit growth, albeit at a slower level, tame interest rate environment and all of that historically has spelled upside for equities.

MILLER: But some Wall Street pros worry the market could run into trouble starting in the second half of April. They predict less money will flow into the market after April 17, this year's tax deadline for contributions to individual retirement accounts. Plus, May through October is historically the weakest six month period for stocks, according to the "Stock Traders Almanac." That has given rise to the Wall Street adage "sell in May and walk away." One wildcard for stocks this spring is the Federal Reserve, which will meet on May 9. If policymakers hint at a possible rate cut down the road, experts say it could plant the seed for stock market gains. Erika Miller, NIGHTLY BUSINESS REPORT, New York.