Has bottom come to New York stock market?

by Xinhua writer Liu Yifang

BEIJING, May 8 (Xinhua) -- Now that Wall Street has
enjoyed a nearly two-month rally that pushed the major indexes up more than 30
percent has the market seen bottom after hitting a 12-year low just in March?

Many experts say there are a lot of hopeful signs
that the market will continue to rise. They note that the financial industry
seems to be recovering with some better-than-expected economic data and
confidence in the stock market is growing.

The Dow Jones industrial average by Wednesday had
gained 1965.23 points, or 30.02 percent, to 8512.28 since the close of trading
on March 9.

The Standard Poor's 500 index added 243 points,
or 35.92 percent, to 919.53, while the Nasdaq composite index rose 490.46, or
38.66 percent, to 1759.10.

The trends of the three major stock indicators look
similar to their historical performances when the market bottomed out in other
economic crises and then rallied. According to statistics since 1932, the
SP 500 has gained an average of 46 percent in the year after stocks hit a
bottom. The index is now drawing a similar trail.

In April, several big American banks posted
relatively encouraging first-quarter earnings reports. Wells Fargo Co
reported profits of 3 billion U.S. dollars. JPMorgan Chase Co earned 2.1
billion dollars and Goldman Sachs Inc. earned 1.7 billion. All of the profits
came after losses in the fourth quarter of 2008.

The earning reports have been viewed by investors as
the first faint signs of the start of a recovery and sent U.S. stock indexes
climbing.

The U.S. economy, meanwhile, is still contracting but
the rate of contraction is moderating. A bottom for the housing market and the
overall economy also is coming into view, analysts said.

Meanwhile, the U.S. Commerce Department reported
Monday that construction spending rose 0.3 percent in March. It was the first
increase after five consecutive months of decline.

Brian Bethune, an economist with IHS Global Insight,
said that the U.S. economy has already passed the worst period of the recession.

Federal Reserve Chairman Ben Bernanke also said that
if the government takes proper measures, the economy might step out of the
recession as early as the end of this year.

Given that layoffs are still mounting and financial
institutions are still holding huge quantities of unhealthy assets, however, it
is still hard to say whether the stock rally will continue.