The S&P 500 rose 3.2 percent to 931.8, capping its first three-day gain in five weeks and best start to a year since 2003. The Dow Jones Industrial Average increased 258.3 points, or 2.9 percent, to 9,034.69. Both the S&P 500 and Dow climbed to their highest closes since the first week of November. About 7.2 billion shares changed hands on all U.S. exchanges, 29 percent fewer than the three-month daily average as trading slowed at the end of the holiday-shortened week.
The S&P 500 decreased 38.5 percent in 2008, the most since the 38.6 percent plunge in 1937, and sank to an 11-year low on Nov. 20. Volatility increased, with the index rising or falling at least 5 percent in a single day 18 times during the year.
Majority analyst believes the worst has been seen, and the market has been holding very well after bad news since November 20, this is a sign of a bottom. Majority believes we are going to see a rebound in both the economy and the stock market in the 2nd half of 2009. 2009 will not be a super year, but it will be better than 2008. Investors should be cautioned against reading too much into Friday's advance due to the light volume. The first full week of the new year
should provide insight into investor sentiment for 2009. Expectations are extremely low for the economy, for corporate earnings and for the stock market itself. We need to see how the market reacts to the economy news and corporate earnings in January, whether a lot of bad news is priced in, and we might see some sell offs.
The S&P 500 climbed 6.8 percent this week, its best week since November, and extended its rebound from Nov. 20 to 24 percent. At its lowest closing level of 2008 on Nov. 20, the S&P 500 was down 49 percent for the year and 52 percent from its Oct. 9, 2007, record of 1,565.15. The plunge came as more than $1 trillion in credit-related losses at global financial companies triggered the first simultaneous recessions in the U.S., Europe and Japan since World War II.
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