Is the stock market turning around?

Reports state that April was one of the best months for Wall Street in 9 years. Indications are that the stock market is regaining its original form. The Standard & Poor’s 500 Index, which is regarded as one of the most reliable indicators of the financial market attained the 9.4% mark in April. This was one of the best performances manifested by S&P 500 Index since March 2000, when dot-com bubble was at its peak. The Dow Jones Industrial Average climbed 7.4% in April. Stock market is a very reliable indicator of the economy and before the economy regains its original form, the stock market does.

The positive changes are sure to bring some solace to the investors. However, there are a couple of financial analysts who are of the opinion that the stock market may plunge again during the summer before climbing again. Although, the indices are sending positive signals, Dow Jones is still low as compared to what it was in October 2007 by 42%. Similarly, the S&P 500 Index is also down by 44%.

Nevertheless, an air of optimism is ruling the financial markets. U.S. Stocks climbed approximately USD$1 trillion in value in the month of April. There was 18.7% gain in March-April for the S&P 500 Index. Investors have pinned their hopes on the stock market and believe that Wall Street may play an instrumental role in helping the economy to bounce back. It has also been observed that consumer spending is improving. It may be recalled that Citigroup announced that it had earned profit in January-February 2009. Soon other banks followed suit and announced their results. And results were not as bad as expected.

Studies reveal that the bank stocks that led to the catastrophe earlier could possibly help in turning around the economy this time. However, numbers can be misleading at times. And the figures obtained are only for a period of 2 months and it may be too early to comment that the economy is becoming stable. To quote Stephanie Giroux, the chief investment strategist associated with brokerage TD Ameritrade, “I think the market rally that we’re seeing is a little bit of false euphoria. When the market starts to digest that the less bad isn’t going to be enough, you’ll see it maybe take a breather for a while”.

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Stock Market & Investing – Stocks are a share of the ownership of a company. If the company does well, or even if everyone thinks the company is going to do well, the price of the stock goes up. In addition, many companies give a little dividend payment each year to the stockholders, which provides extra value.