Stocks soar worldwide as ‘green shoots’ lure hungry bulls

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Stock markets worldwide went on a tear today, stoked by more optimism about the global economic outlook.

The advance on Wall Street pushed the benchmark Standard & Poor’s 500 index back into the black for the year, for the first time since Jan. 8.

The S&P jumped 29.72 points, or 3.4%, to 907.24. It’s now up 0.4% year to date, after plummeting as much as 25% between Jan. 1 and March 9.

The Dow Jones industrials gained 214.33 points, or 2.6%, to 8,426.76.

Rising stocks outnumbered losers by almost 6 to 1 on the New York Stock Exchange, although trading volume was relatively modest -- which could suggest the eight-week-old rally is running out of gas, some analysts warn.

Asian markets soared overnight after an index of manufacturing activity in China jumped to 50.1 in April from 44.8 in March -- the first close above the 50 mark since July. Any reading over 50 indicates that activity is expanding.

The Shanghai composite stock index rose 3.3% to its highest level since early August. It’s up nearly 41% this year.

The Mexican market rocketed 5% to its highest since early January as fears ebbed that the swine flu outbreak would cause lasting damage to the economy. The government said most businesses that were shut down in recent days to help stem the outbreak would reopen Wednesday.

Stocks also surged across Europe. The German market jumped 2.8%. Russia’s market rose 4.1%.

On Wall Street sentiment was helped by a report that pending home sales rose for a second straight month in March.

In recent weeks, ‘green shoots,’ or signs of improvement in the economy (the term was coined by Federal Reserve Chairman Ben S. Bernanke), have been eagerly received by investors who’ve been looking for reasons to jump back into equities after the long bear market. . . .

Much of the data have just hinted that the U.S. recession was bottoming, not that a recovery was imminent. But the news has been good enough for market bulls. Worries about the U.S. financial system, meanwhile, have receded into the background. Investors weren’t fazed by rumors Monday that the government would force Bank of America Corp., Wells Fargo & Co. and other big banks to raise more capital after ‘stress test’ results are announced Thursday.

Wells’ shares soared $4.64, or 24%, to $24.25 after the bank’s biggest investor, Warren Buffett, said he remained bullish about its prospects -- although it would be hard to imagine him saying anything else, given his nearly 7% stake in Wells.

Financial stocks in the S&P 500 were up 10.1%, on average. All 10 major S&P industry sectors rose in the session.

‘This was one of those days when nobody wanted to get in the way of the momentum,’ said Art Hogan, market analyst at Jefferies & Co. in Boston.

But he said trading volume was unimpressive for such a big day. Heavy volume would indicate that money was pouring in from the sidelines; light volume suggests that the market is dominated by short-term traders.

Phil Roth, market analyst at Miller Tabak & Co. in New York, said he has been encouraged by the breadth of the rally in recent weeks, as stocks have advanced across most major industry sectors.

But like Hogan, Roth finds the weak volume concerning.

‘I don’t see signs that it’s over because it’s been very broad,’ he said. ‘But it’s late because the volume has dropped way off.’

-- Tom Petruno and Walter Hamilton