Unfazed by the flu, global stock markets keep flying

Not even the threat of a global flu pandemic could knock the world's stock markets out of their bullish trajectories this week.

U.S. blue-chip indexes rose for the seventh week in the last eight. Indexes of some market sectors made it eight in a row.

"With everything that’s been thrown at the market, we think it’s holding up well," said Ryan Detrick, an analyst at Schaeffer’s Investment Research in Cincinnati.

Wall Street’s bears insist that stocks are overdue for a sharp pullback, but modest setbacks this week just attracted more buyers. That’s what the bulls have been hoping to see.

The Standard & Poor’s 500 index fell 1% on Monday and 0.3% on Tuesday, then jumped 2.2% on Wednesday. After easing 0.1% on Thursday, the S&P gained 0.5% today to close at 877.52 -- its highest since Jan. 9.

The net gain for the week: 1.3%.

The Dow Jones industrials added 44.29 points, or 0.5%, to 8,212.41 today, the first close above 8,200 since Feb. 9. The Dow was up 1.7% for the week.

Investors continue to get bigger bang for their bucks in smaller stocks. The S&P small-cap index rose 1.9% for the week, its eighth straight weekly advance.

From their lows on March 9, the S&P small-cap is up 43.3% while the S&P 500 is up almost 30%.

Market optimists continue to latch on to reports that show the economy has stopped getting worse, even if it isn’t getting notably better.

Today, bulls were stoked by a jump in a key consumer confidence index to its highest reading since September. Also, a gauge of U.S. manufacturing activity posted a bigger-than-expected gain in April.

Importantly, U.S. stocks aren’t rising in a vacuum: The rally, like the new flu, remains a global affair. Japan’s Nikkei-225 index jumped 3.1% for the week, Germany’s DAX index was up 2% and Brazil’s Bovespa index rose 1.1%.

So if American investors are wrong about the global recession bottoming -- and about the flu’s economic impact ultimately being modest -- they have a lot of company.

-- Tom Petruno

Photo: An entrepreneur sells face masks on a street in Costa Rica. Credit: Jeffrey Arguedas / EPA

Comments

[mr.bilko]

Historically, stock indexes act as predictors of where they think the economy will be in 4 to 6 months. This time, traders seem to be trading on momentum instead of solid indicators. The traders are seeing that the cancer isn't as bad as estimated so they overreact by pretending it's party time. The Dow will continue to trade in the 7500 +/- 1000 range for a long, long time since, fundamentally, nothing has really changed in the last six months, and the next six months looks like the last six months. Stagnation, sideways, flat, are the keywords. Like Tom wrote: "... the economy has stopped getting worse, even if it isn’t getting..better."