2009 Begins With The Dow Above 9000
Friday, January 02, 2009SUSIE GHARIB: Wall Street rang in the New Year with a bang. The Dow surged 258 points, closing above the 9,000 level for the first time since November. The NASDAQ jumped 55 and the S&P 500 rose 28 1/2 points. Investors snapped up stocks on optimism about a new year and a new administration. As Suzanne Pratt reports, how stocks perform this month could be critical for setting the tone for the rest of the year.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: There is a saying on Wall Street: as January goes, so goes the year. But, the so- called January barometer is more than Wall Street lore. It also works. According to the "Stock Traders Almanac," since 1950, the seasonal indicator has been accurate 91 percent of the time. An up January suggests a good year for the market, while a down beginning leads to a disappointing year. So, what about this January? Market strategist Carmine Grigoli says the first month of 2009 will be a good one.
CARMINE GRIGOLI, CHIEF INVESTMENT STRATEGIST, MIZUHO SECURITIES USA: I think we're in the process of recovering. I think we've seen the lows. Since November 20th the market is up about between 15 and 20 percent. It's likely to continue that momentum into January and probably through most of the year.
PRATT: Grigoli expects major averages to rally as much as 40 percent this year, thanks to extremely attractive valuations. He says the market will recover well in advance of the economy.
GRIGOLI: Once a recovery is in sight, the market is up dramatically. You take the last two severe recessions in the post-war period, you'll find that by the time the economy recovered, the stock market was up 35 percent.
PRATT: But, others are less certain stocks will begin on a positive note. Market strategist Manny Weintraub says one man holds the key to how stocks will start 2009.
MANNY WEINTRAUB, MARKET STRATEGIST, INTEGRE ADVISORS: January is going to be determined by news coming out of the incoming Obama administration. I mean that's everything, it's the only thing that matters.
PRATT: Weintraub says a hefty stimulus package will mean a bullish beginning for the market. He sees a more timid plan leading to early losses. While Weintraub is uncertain of how stocks will begin the year, he predicts they'll end 2009 up thanks to an improving credit market.
WEINTRAUB: I'm optimistic because high quality corporates have been rallying since October. And you're starting to get some move of junk bonds beyond that. And then once the junk bonds move, then that could get the all clear sign for the equity market to move as well.
PRATT It looks like Santa has also given an all clear sign for stocks in 2009. History shows that when the market rallies between Christmas and the first few trading days of the year, known as the Santa Claus rally, it also does well for the full year. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
