Glimmers of hope push S&P 500 into positive territory

NEW YORK -- The S&P 500, which was down 25% for the year at the bear market low in early March, stormed back into positive territory for 2009 on Monday as investors bet that an economic recovery is on the horizon.

Better-than-expected data that hint at better days ahead for the battered U.S. economy were again the catalyst that enticed buyers back into the stock market.

Two new economic nuggets bolstered the case that the economy's slide could be slowing and helped extend a two-month rally. Pending home sales jumped a surprising 3.2% in March, the second monthly gain in a row. And the Commerce Department reported that construction spending climbed 0.3% in March, ending a string of five-consecutive monthly declines.

Those two glimmers of hope were the latest in a growing list of so-called economic green shoots sprouting up on Wall Street that point to an easing of the worst recession in decades. The stock market, which is viewed by many investment analysts as a forward-looking animal that prices in future events, rallied sharply on the news.

The Standard & Poor's 500, which had plunged to a closing low of 676.53 on March 9, rallied 3.4% Monday to 907.24, eclipsing its 2008 year-end close of 903.25. The benchmark index, which is up 0.4% for the year, has rallied 34.1% from its bear market low in March. The rally amounts to a fresh bull market, defined as a gain of 20% from a low.

"The stock market is forecasting a recovery in the economy," says John Bollinger, founder of investment website BollingerBands.

The current rally marks the most powerful percentage gain since the last bull market peaked in October 2007, says Bespoke Investment Group. Since March 9, the stock market has gained $2.9 trillion in market value, yet is $8.1 trillion below its peak value, says Wilshire Associates.

Bollinger thinks this bull market is for real and has legs. The key to the rally is that most of the major U.S. stock indexes are "breaking out" of down trends, holding patterns and trading ranges, a surge that bodes well for future gains, he says.