SmartInMoney

 

 

 

After stumbling for a couple of weeks, Wall Street's rally got its steam back. By July 24 the S&P 500 found itself up a lofty 45% from its Mar. 9 low, and the Dow Jones Industrial Average 39% after breaking through and closing above a key psychological barrier of 9000.

Economy and financial markets seem to be at a key transition point, from recession to uncertain recovery. The Conference Board's index of leading economic indicators rose in June for a third straight month, and Fed Chairman Ben Bernanke said he saw "tentative signs of stabilization" in the economy.

 

Investors think they smell a recovery in the wind, and surprising earnings from companies as varied as Apple, Caterpillar, Pfizer, and Starbucks certainly helped.

 

The Wall Street Journal reported that in a quarterly report to fund shareholders, Mr. Miller said that a new bull market is under way and that technology and financial-services stocks would be among its leaders. "Bull markets typically begin when the following four conditions are present: the economy is bottoming; profits are bottoming; the Fed is stimulating; and valuations are low," Mr. Miller wrote in commentary published Wednesday. "That's where we are now."

 

But there's reason to be skeptical of an earnings surge, and so far the bull market hasn't generated widespread enthusiasm. The S&P remains 37% below its October 2007 all-time high, and the DJIA 36%.