March 30 - Wall Street closes out its best first quarter since 1998 and its best quarterly performance in more than two years, but the second quarter may be tough as earnings season and the Presidential campaign pose potential risks to the rally. Conway G. Gittens reports.
PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL The year is off to a solid start as stocks close out their best quarter in more than two years. The Nasdaq gained 19 percent: making it the biggest winner of the January to March period. The S&P 500 surged 12 percent: its best first quarter in fourteen years. And an 8 percent gain for the Dow is nothing to frown about. Investors sense a turn in the two things that dominated market psychology last year. SOUNDBITE: FRED DICKSON, CHIEF MARKET STRATEGIST, D.A. DAVIDSON & CO (ENGLISH) SAYING: "Investors have awakened and realize the economy is gaining some momemtum. The thoughts and threat of the economy going back into recession are off the table. The second thing is that at least momentarily - the European debt crisis has been put on the back shelf." But some analysts say if you look at market internals - there are signs the rally may need more to rise from here. Skeptics point out trading volumes are low and the small investor is still weary after the 2007 financial crisis. Others say the market has to get through earnings season to see if the rally can continue. SOUNDBITE: FRED DICKSON, CHIEF MARKET STRATEGIST, D.A. DAVIDSON & CO (ENGLISH) SAYING: "We have the potential, we could run higher but the first speed bump we have to get over is first-quarter earnings season and with Europe slowing down and Asia slowing down and energy prices up - we have some concerns about the fact that company earnings may miss analysts projections. So our first speed bump comes as we get to mid-April, mid-May." Another speed bump comes in June when the Supreme Court issues its decision on President Obama's healthcare reform and after that, markets will be under the spell of the presidential election. As for Friday action - data pointing to a consumer that may keep spending gave the Dow and S&P 500 a bounce, but the Nasdaq slipped. For the week: blue chips gained 1 percent and the Nasdaq rose 0.8 percent. European stocks rallied as euro zone leaders agreed to boost a financial firewall to 800 billion euros. Conway Gittens, Reuters