Stock Market is Up

The stock market is bouncing back. Stocks closed up for the fifth straight week, capping the largest percentage increase since 1933. Sound familiar? The stock market just has its worst percentage decline since the Great Depression and now it is having its largest percentage increase since the Great Depression.

Why were stocks up so much? The main reasons are the positive news to come out of the G20 and that banks seem to be performing better than expected. Wells Fargo's reported earnings that were higher-than-estimated and investor speculation that banks will pass government stress tests spurred optimism that the industry's slump may be ending.

The S&P 500 gained 1.7 percent, to 856.56. It has increased 27 percent since March 9, the largest 23-session rise in 76 years. The Dow Jones industrial average added 0.8 percent, to finish the week at 8083.38. The Nasdaq increased 1.9 percent, to 1652.54. Some very positive signs for the last month.

Three of the big boys - American Express, Bank of America, and J.P. Morgan Chase helped drive an index of 80 financial companies in the S&P’s 500-stock index to a 9.4 percent advance. Principal Financial Group jumped 37.4 percent as the Treasury Department considered bailouts for life insurers, Wells Fargo surged 32 percent on Thursday when it reported that it would record first-quarter profit and Lincoln National spiked 50.7 percent.

Very impressive percentage increases, but considering the percentage that these stocks were down before the increase they still have a long way to go before most investors will recoup their money.

If the financial sector can continue to show these types of signs of a recovery for a sustained period of time the economy overall could show some positive signs. The biggest impact the improving financial sector can have is on the job market. If companies can start getting loans again, then they can start hiring again. The economy will not pull out of this recession until the unemployment rate starts getting smaller instead of bigger.

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Have a great Monday!