The stock market and investors finally got the powerful combination they've been waiting for: encouraging earnings reports and a big advance that appears to have staying power.
Energized by a round of better-than expected earnings reports -- namely from Citigroup Inc., General Motors Corp. and Johnson & Johnson Inc. -- the Dow Jones industrials surged 378 points Tuesday and closed back above 8,000 for the first time in a month.
All three of the market's major indexes scored four-day advances, with the Dow netting nearly 1,000 points.
Analysts were encouraged, and this time they didn't disparage the gain by calling it a bear-market rally. Buyers appeared to have real energy, allowing the market's indexes to close at their highs for the day.
"Buying feeds on buying," said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif. "And, confidence starts to return."
The market could be on an upward path, analysts said.
"There is more of a sense of sustainability," said Larry Wachtel, market analyst at Prudential Securities Inc.
Still, stocks were expected to pull back in coming sessions as investors lock in profits from the big gains.
Indeed, that was the case Wednesday, as the Dow closed down 219.65, to 8,036.03, the Nasdaq composite index sank 50.02, to 1,232.42, and the Standard & Poor's 500 index fell 21.25, to 860.02.
And, the market remains vulnerable to disappointing earnings, such as those released late Tuesday by Intel Corp. The world's largest chip maker missed expectations by 2 cents a share.
Intel's results also contributed to Wednesday's selloff.
But Wachtel and other analysts believe that this rally is the start of true upward progress on Wall Street, and that stocks won't be revisiting the dreadful lows of last summer.
Hasn't Wall Street seen all this before? Gotten its hopes up prematurely? Indeed, the market has been faked out by rallies in past earnings seasons.
Analysts say this time is different, however, and there is reason to be upbeat about stocks' future.
"One of the fundamental overhangs that the market has been suffering from [has lessened], and that is, earnings are not as bad as everyone thought," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group Inc. in Philadelphia.
Analysts also were heartened by the market's ability to rally for four straight days, a feat not achieved by the Dow and the S&P in 10 weeks and not seen by the Nasdaq in five months.
Recent rallies have been shorter-lived, as selloffs quickly erased gains. One reason this rally has lasted longer is that there has been real buying occurring, rather than the short-covering seen in other recent surges.
In short covering, investors who had sold shares on expectations that the market will keep dropping are forced to buy stocks to adjust their positions when stocks advance. So, these investors are investors who don't anticipate a big rebound.
"This was fresh buying, not a short-covering rally," Moore said. "It is occurring with a backdrop of economic progress and earnings progress, albeit small in both cases."
History also offers the market some promise as the fourth quarter often is the strongest for stocks.
Energized by a round of better-than expected earnings reports -- namely from Citigroup Inc., General Motors Corp. and Johnson & Johnson Inc. -- the Dow Jones industrials surged 378 points Tuesday and closed back above 8,000 for the first time in a month.
All three of the market's major indexes scored four-day advances, with the Dow netting nearly 1,000 points.
Analysts were encouraged, and this time they didn't disparage the gain by calling it a bear-market rally. Buyers appeared to have real energy, allowing the market's indexes to close at their highs for the day.
"Buying feeds on buying," said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif. "And, confidence starts to return."
The market could be on an upward path, analysts said.
"There is more of a sense of sustainability," said Larry Wachtel, market analyst at Prudential Securities Inc.
Still, stocks were expected to pull back in coming sessions as investors lock in profits from the big gains.
Indeed, that was the case Wednesday, as the Dow closed down 219.65, to 8,036.03, the Nasdaq composite index sank 50.02, to 1,232.42, and the Standard & Poor's 500 index fell 21.25, to 860.02.
And, the market remains vulnerable to disappointing earnings, such as those released late Tuesday by Intel Corp. The world's largest chip maker missed expectations by 2 cents a share.
Intel's results also contributed to Wednesday's selloff.
But Wachtel and other analysts believe that this rally is the start of true upward progress on Wall Street, and that stocks won't be revisiting the dreadful lows of last summer.
Hasn't Wall Street seen all this before? Gotten its hopes up prematurely? Indeed, the market has been faked out by rallies in past earnings seasons.
Analysts say this time is different, however, and there is reason to be upbeat about stocks' future.
"One of the fundamental overhangs that the market has been suffering from [has lessened], and that is, earnings are not as bad as everyone thought," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group Inc. in Philadelphia.
Analysts also were heartened by the market's ability to rally for four straight days, a feat not achieved by the Dow and the S&P in 10 weeks and not seen by the Nasdaq in five months.
Recent rallies have been shorter-lived, as selloffs quickly erased gains. One reason this rally has lasted longer is that there has been real buying occurring, rather than the short-covering seen in other recent surges.
In short covering, investors who had sold shares on expectations that the market will keep dropping are forced to buy stocks to adjust their positions when stocks advance. So, these investors are investors who don't anticipate a big rebound.
"This was fresh buying, not a short-covering rally," Moore said. "It is occurring with a backdrop of economic progress and earnings progress, albeit small in both cases."
History also offers the market some promise as the fourth quarter often is the strongest for stocks.