Dow jumps 124 as market bullishness grows

Stocks surge to new highs after a big hedge-fund manager says he's 'definitely bullish.' Plus, traders are cheered by falling government deficits.

By Charley Blaine May 14, 2013 4:44PM
David Tepper © Daniel Acker/Bloomberg via Getty ImagesUpdated: 5:49 p.m. ET.

It's the middle of May and, thanks to hedge-fund manager David Tepper, the stock market cheerfully ignored the saw "Sell in May and go away." Instead, the market jumped to new highs.

Tepper (pictured) runs Appaloosa Management in New York. He went on CNBC Tuesday morning and said he was "definitely bullish" about U.S. stocks.

Wait a minute: Isn't the economy a mess? Nope, Tepper argued, the auto industry is stronger. Housing is recovering. Jobs are starting to come back. Plus, central banks in Australia, Europe, South Korea and Japan have joined the Federal Reserve in trying to boost regional economies.

As if that weren't enough, the Congressional Budget Office cut its projection of the federal deficit to $642 billion for the 2013 fiscal year, down from a February estimate of $845 billion. The deficit will shrink to 4% of gross domestic product from a 2009 high of 10.1%. The improvement is due to rising federal revenue, spending cuts and payments to the government from mortgage companies Fannie Mae and Freddie Mac.

Lots of traders were apparently watching Tepper because what was, at first, looking like a stock market heading back to bed jumped right up after his TV appearance.. The rally accelerated after the budget estimates came out. Just before the close, the Dow Jones industrials ($INDU) closed up 124 points to 15,215. The blue chips hit a new intraday high of 15,219.55. 

The Standard & Poor's 500 Index ($INX) added 17 points to 1,651.10 and hit a new intraday peak of 1,650. The Nasdaq Composite Index ($COMPX) rose 24 points to 3,463, its best close since Oct. 23, 2000.

The rally was the 18th straight on a Tuesday since Jan. 8. It left the Dow up 16.1% for the year, its best year-to-date performance since 2006. The S&P 500 is up 15.7% this year and the Nasdaq up 14.7%.

The major averages are not only trading at all-time or multi-year highs, but they're all 11% or more above their 200-day moving averages. Their relative-strength indexes are 79 for the Dow, 80 for the S&P 500 and 84 for the Nasdaq. RSIs measure momentum, and readings above 70 are overbought signals.

Despite all that, Tepper said he was bullish on stocks, and investors shouldn't worry about the Federal Reserve tapering its massive bond-buying program. He expects the central bank to dial back its bond-buying program next year. That will cool off inflationary pressures.

Tepper's hedge funds own a broad swath of stocks. His biggest holding is Citigroup (C).  (You can see his holdings at the end of the first quarter here.)

One downside to what was a broad rally was that Apple (AAPL), which was muddling along slightly lower on day, abruptly started to move lower after 1:30 p.m. ET. Apple closed at $443.86, off $10.88.

Only three of the 30 Dow stocks were lower on Tuesday: United Health Group (UNH), Intel (INTC) and Caterpillar (CAT). Cisco Systems (CSCO) was flat at $21.27. The networking giant reports results after Wednesday's close.

Bank of America (BAC) was the top Dow performer, followed by American Express (AXP)  and Chevron (CVX).  More than 430 S&P 500 stocks were higher, led by Apollo Group (APOL) and Edwards Life Sciences (EW).

Crude oil (-CL) fell 96 cents to $94.21 a barrel in New York. Gold (-GC) dropped $9.80 to $1,424.50. The 10-year Treasury yield rose to 1.952% from Monday's 1.923% and 1.68% on April 30 as the rally pulled money from the bond market.

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34Comments
May 14, 2013 6:24PM
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Definitely time to sell when hedge fund managers are getting bullish. He's luring the rabbits under the box so he can pull the string.
May 14, 2013 5:29PM
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It seems strange that this guy that I have never heard of can raise the stock market 1% by saying he is bullish. Are you sure you should be giving all of the thanks to him?
May 14, 2013 7:15PM
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Just don't trip over the printing press power cord - pull the plug from the socket and we're all in trouble.
May 14, 2013 5:42PM
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Yeah, how can someone just mention that the market is fine and the economy is great and everyone is bullish, then the market goes straight up. No, the stock market has been doing just fine for the last several months, thank you very much no hair Squiggy.
May 14, 2013 7:08PM
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Funny thing about bulls, they look the same when they are running to the top of a mountain as they do when they are running to the slaughterhouse.  Mmmmmm, steak.......
May 14, 2013 6:09PM
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You can't trust any Money Manager's comments on the Markets. Their number one goal is to pump the markets up if long and down if their not. They care very little about the State of the Economy. Global Feds printing 24/7 isn't a positive. Apparently, some bonds have been backing up lately to reflect that. Auto sales, well folks use to get loans of four years, now many are getting loans in the 6 to 8 year ranges, that isn't a positive.

Housing isn't in recovery, as actually home ownership is down, not up. Now the CBO stating a major reduction in the Debt outlook for the fiscal year, that has more to do with any Market rise or fall then some farce Money Changer.

May 14, 2013 11:01PM
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Remember the super genius analysts who said gold was going over $3000? Remember the super PHDs who said APPL was going over $1000? Remember the Dot Com Bubble? Folks, when the people with all the brains say now is the time to buy, it is time to SELL!
May 14, 2013 10:32PM
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This report scares me more than the doom and gloom ones we've seen over the past few years.
May 14, 2013 7:42PM
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Let me answer all of your questions regarding this individuals comments and the market response.

You must understand that the market is as much emotion as it is business savvy.

While we must do our homework, many individuals buy or sell based strictly on emotion.

Someone, anyone, speaks, people follow like sheep.

When everyone sold, ran and hid starting in 2008, I kept buying.

The result was additional prosperity for me. This stuff is not difficult to figure out.

Over time the market will go in only one direction. UP.

May 14, 2013 10:08PM
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Where's Mirandyan or what ever his name is. The guy that said the world was ending and we should short and bear the market. He must only write during a full moon I guess. 
May 14, 2013 11:14PM
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I never heard of Tepper either, and I'd ignore his rather "thin" analysis of the economy.

Here is something that I would pay attention to:

Google "NFIB monthly report of small business economic trends"

Anyway this is a survey of small business economic trends, and it is put out Tuesday of every month. This report doesn't paint a very favorable picture of the economic trend for small business. You'll have to read it to appreciate its significance, and why it is very disturbing in light of the so-called BULL Market. 
May 14, 2013 11:45PM
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huge market bullishness.we must be close to a correction
May 14, 2013 7:12PM
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I don't know who this guy is....Don't really care..!!

 

We all have our opinions...

May 14, 2013 7:51PM
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judgment cometh, and that right soon ....
May 14, 2013 8:25PM
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The fack Fed market. How long will this last??

May 14, 2013 9:08PM
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It is hopium, pure hopium. They'll start pushing the "S" word again soon, as in "soaring."
May 15, 2013 8:55AM
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As long as the printing press continue  to run and pump money into the market, Stocks will move higher...

When the presses stop, look out below!
May 15, 2013 9:16AM
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Tried a couple times to post here last night...If you are blocking give it your best shot.

I don't need to be here.

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