The economic data offered its testimony. The Federal Reserve chairman preached the gospel of redemption. And the faithful on Wall Street could rejoice that they’d been absolved of the sins that took their greatest toll exactly one year ago.
And Main Street could hope that, one day, it, too, could feel that salvation.
Market values aren’t back where they were a year ago - they are, in fact, back to where they were fully eight years ago - so there is yet a measure of atonement and soul-searching that still has to be done. The Dow Jones Industrial Average, which gained 57 points Tuesday to record its seventh advance in the last eight sessions, finished at 9683.
That’s the highest the market measure has finished since Oct. 6, leaving it at a roughly 50-week high. But it’s still 15% below where it closed the trading day before Lehman Brothers collapsed, the event that exacerbated the financial crisis, amplified the economic distress, and threatened to bankrupt investors and home owners.
In hindsight, it’s clear that the government’s efforts to take its lesson from Lehman Brothers, whose collapsed trigged a 500-point one-day selloff in the Dow industrial average, and extend a lifeline to cratering financial titans like American International Group (AIG) helped to forestall a greater collapse of the financial food chain, even if it created a host of challenges that have yet to be faced.
Nevertheless, a year after the failure of Lehman Brothers, a look at retail sales offered one of the most-constructive readings on consumer spending seen in a year, and producer prices - goosed by the cash-for-clunkers campaign - jumped 1.7%, also ahead of expectations.
And 22 months after the U.S. economy fell into a recession, no less a luminary than Ben Bernanke himself proclaimed that he believed the recession has ended.
Granted, the Fed chairman said he thought the recession had ended from a technical perspective. And that he didn’t expect anybody disassociated from a recovery by the weakness in the labor markets would feel any immediate benefits of the turnaround.
Nevertheless, industrial stocks staged a classic recovery-trade rebound. Caterpillar (CAT) jumped 6% in the session. Alcoa (AA) advanced 8%. General Electric (GE) swelled 4%, reaching its highest price since January.
To be sure, the wages of sin can be heavy, and the toll on the road to redemption can be costly. Citigroup (C), which said it wanted to dialogue with the government about eliminating the taxpayer’s stake in the bank, remained 77% below where it traded when Lehman collapsed. Bank of America (BAC) has lost 50% in a year. Wells Fargo (WFC) remained 17% lower. Of the major financials, only Goldman Sachs (GS)
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Stocks to Watch Today is a daily blog about key stock and market movements, written by Barrons.com stocks columnist Bob O'Brien. O'Brien updates this blog and provides video reports several times each trading day offering unique insight and analysis. O'Brien is a 14-year veteran of Dow Jones & Co., having most recently worked at Wall Street Journal Television, where he appeared daily on CNBC under the Journal's content-sharing agreement with NBC. Prior to WSJ Television, O'Brien was an equities market reporter at Dow Jones Newswires.
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