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The Lazarus rally continued last week, and stocks raced ahead, this time by more than 2%. Following this month’s trend, the worst stocks of 2011 have been raised from the dead and are the leaders of the still young 2012.
The 50 worst-performing stocks in the Standard & Poor’s 500 Index last year, for example, have jumped about 11% this year, while 2011’s 50 best stocks are up just 2%, according to Bespoke Investment Group.
Trading volumes last week were generally light, and earnings results were taken positively by the market, even though there is evidence of slowing revenue gains at some big companies. No one’s going to sniff at last week’s rise, but a pullback in the next week or two would seem to be in order.
The Dow Jones Industrial Average rose 298.42, or 2.4%, on the week, to close at 12,720.48, while the Standard & Poor’s 500 to 1315. That’s the first weekly S&P 500 close with a 13 handle since last July. The tech-heavy Nasdaq Composite gained 2.8%, to 2786.70, helped by strong fourth-quarter profits from Microsoft (ticker: MSFT) and chip maker Intel (INTC).
While its revenue numbers were light, the biggest Lazarus of them all, Bank of America (BAC), did report better-than-expected fourth-quarter revenue Thursday. The rest of its results were made murky by charges and one-time gains, and its basic banking results weren’t stellar. Still, that didn’t stop investors from bidding up the market and the stock, the latter now up 27% this year and the leading Dow component.
“Stocks left for dead have come back to life, and people are feeling good about a rally led by financials,” notes Nicolas Colas, chief market strategist for ConvergEx Group. “It follows the old-school playbooks, and as long as banks lead, it’s going to be hard to suppress the rally” (Source: Barrons Online).