- The Washington Times - Saturday, September 19, 2009

NEW YORK | The stock market shifted back into rally mode Friday after analyst upgrades boosted investor optimism about the economy.

A 36-point advance in the Dow Jones Industrial Average left the index at a new high for the year and with a gain of 215 points for the week, its best weekly performance since July. Stock indexes have risen in nine of the past 11 days.

The market got a boost from a new economic forecast at Barclay’s Capital, which raised its projection for growth in the nation’s gross domestic product for the first three months of next year to 5 percent from 3 percent. GDP has been shrinking, although many economists think it will return to growth for the July-September quarter.

Meanwhile, Procter & Gamble Co. pulled the Dow higher after an analyst raised her rating on the consumer products company in part because of its price-cutting strategy.

The market’s climb came a day after a pullback that did little to quiet analysts’ calls for a break in the market’s run.

Marc Harris, co-head of global research for RBC Capital Markets in New York, said the strength of the rally has surprised many investors because some of the stocks posting the biggest advances are lower-quality companies with weak balance sheets that investors only months ago feared might go out of business.

“Even turkeys are going to fly in a hurricane,” Mr. Harris said. “Those lower-quality companies are leading the charge here.”

Financial companies and home builders have been among the biggest gainers in the recent run. Many of these companies still face major hurdles with bad debt and the weak housing market.

Many analysts expect the market’s run will slow - but perhaps not stop - as investors shift their holdings from industries where the gains have been strong, such as technology, to areas that have lagged.

The Dow rose 36.28, or 0.4 percent, to 9,820.20, its highest close since Oct. 6, when it finished at 9,956. The index is up 11.9 percent for the year.

The broader Standard & Poor’s 500 Index rose 2.81, or 0.3 percent, to 1,068.30, while the Nasdaq Composite Index advanced 6.11, or 0.3 percent, to 2,132.86. The Russell 2000 Index of smaller companies rose 2.41, or 0.4 percent, to 617.88.

P&G; rose $1.79, or 3.2 percent, to $57.32 after its upgrade from Citi Investment Research.

Industrial stocks logged some of the biggest jumps this week. General Electric Co. surged 12.5 percent for the week, while Caterpillar Inc. added 10.1 percent.

Phil Guarco, global investment strategist for JPMorgan Chase & Co.’s Private Bank in New York, said a broad rally has given investors an easy ride.

“It’s been kind of an investors’ nirvana because all asset classes have been going up essentially,” he said. “It can’t go on forever like that.”

Many analysts still say the market is due for a break. Linda Duessel, equity market strategist at Federated Investors in Pittsburgh, said a retreat of 10 percent or more in major stock indexes wouldn’t be surprising. The S&P; 500 has rocketed 57.9 percent from a 12-year low in early March. An advance that size might often take five or six years to occur.

She said that even if there is a slide, stocks could resume their climb because so many investors missed the rally.

“The most common question I get when I travel is, ‘Do you think I’ll get a pullback so I can get in?’ That’s so bullish,” she said.

The Dow closed the week up 214.79, or 2.2 percent, at 9,820.20. The S&P; 500 rose 25.57, or 2.5 percent, to 1,068.30. The Nasdaq rose 51.96, or 2.5 percent, to 2,132.86.

Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.46 percent from 3.39 percent late Thursday.

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