March 6th was the low market point of the first quarter of 2009. We have had six weeks of gains since that low point in March. The S&P 500 has rallied approximately 29% from that low. It is nice to see companies begin to beat earnings estimates and they release sales numbers in this quarter. The rally has been led by the financials, and several banks have posted profits. American Express surged 21% after they released better than expected earnings. Even with the recent rally, we are still below where the year ended in 2008 and the S & P 500 is 37 points, or 4% below the December end.
We are not out of the woods yet and I expect a pullback from this recent rally. That said, it could be short lived if earnings estimates continue to surprise with good numbers. The mood of investors is starting to lean toward positive as things are progressing through Spring. As Treasury Secretary Tim Geithner released the bank stress test results, the market was relieved that more banks do not need more funding and that most US banks are well capitalized. The Federal Reserve released a white paper, saying "Most U.S. banking organizations currently have capital levels well in excess of the amount required to be well capitalized. However, losses associated with the deepening recession and financial market turmoil have substantially reduced the capital of some banks."
Several banks shares gained as the results of the stress tests were announced.
This weekend the meeting of G7 and G20 will be held in Washington. These are the leaders of the world who are shaping our response to the global financial crisis. May it be a productive meeting!
Sandy