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.
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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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.
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.
I don't know who this guy is....Don't really care..!!
We all have our opinions...
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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After enjoying a smooth rise in stock prices since May, investors are about to be hit with another bout of volatility.
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