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Analysts say bull market
still has room to grow
NEW YORK >> Wall Street celebrated the first year of its bull market this past week with gains that lifted stocks to 52-week highs. Now investors may have more to cheer about.
While urging caution, analysts say the market should continue its run based on improving corporate profits.
"Investors are enthusiastic about the future. They just don't show any interest in getting rid of stocks at the current price level," said Paul Desmond, president of Lowry's Research Reports. He cited the group's investor selling index, which is at a five-year low.
"As long as that condition exists, we think all the market corrections will tend to be shallow and short-lived," he said. "It's a lot easier when nobody is trying to dump stocks on the buyers."
The sentiment is in contrast to a year ago, when investors were still jittery about the economic outlook and hesitant to make major bets as a war with Iraq loomed. That led to a market slide that pushed the three main gauges to multiyear lows on Oct. 9, 2002.
The date turned out to mark the end of a grueling three-year bear market. Stocks lurched up and down before rallying since mid-March as the war with Iraq wound down.
A bull market is typically defined as a sustained 20 percent move upward, and the Dow Jones industrials is now up 33 percent, the Nasdaq composite is 72 percent higher and the Standard & Poor's 500 index is up 34 percent.
This past week, there were signs of the market's continued strength.
Stocks powered higher Thursday -- the one-year anniversary of the Oct. 9, 2002, bottom -- following a drop in new jobless claims and upbeat Yahoo! earnings. That lifted the Nasdaq to its best level since March 2002, while the Dow and S&P were at levels not seen since June 2002.
Investors also largely shook off an earnings warning yesterday from bellwether General Electric Co. Analysts say that's because more companies overall are expected to meet or beat estimates compared to this time last year.
"What's giving me confidence in the bull market is that it's occurring with a turnaround in the economic situation," said Mitch Zacks, director of research at Zacks Investment Research in Chicago. He believes the market is fairly valued and can move up another 5 percent by year's end.
The Dow ended the week up 102.37, or 1.1 percent, finishing at 9,674.68. For the week, S&P climbed 8.21, or 0.8 percent, to 1,038.06.
The Nasdaq had a weekly gain of 34.74, or 1.9 percent, closing yesterday at 1,915.31. The Russell 2000 index ended the week up 6.78, or 1.3 percent, closing at 519.06.
The Wilshire 5000 Total Market Index, which tracks more than 5,700 U.S.-based companies, ended the week at 10,085.32, up 95.02 from the previous week. A year ago, the index was at 7,873.03.
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