On April 4, all eyes were on China as the fate of a crippled U.S. Navy spy plane and its crew became the focal point of a tense standoff between the two countries.
But something else may have been going on that day. Many experts think the plunging stock market bottomed out, ending one of the most traumatic declines since 1987.
Fifty-one days ago, the Nasdaq composite index fell to 1,638.8, down 68 percent in 13 months. During roughly the same period, the Standard & Poor's 500 stock index, a broader measure of the market, slid 28 percent, and the Dow Jones industrial average slipped 19 percent.
The next day, the stock market began a recovery that, as of yesterday, has sent the Nasdaq rocketing 39.2 percent, the Dow 16.9 percent and the S&P; 500 17.2 percent.
Even mutual fund investors have jumped back in - pumping almost $21 billion into equity funds in April - after withdrawing record amounts of money from funds the month before.
"It looks like the mood of the market has changed for the better," said Alan Ackerman, market strategist at Fahnestock & Co., a New York-based brokerage house. "I see a little more optimism. I think the market's moves generally are broader and more comprehensive, but there are still an awful lot of weak sisters around."
Ackerman is so optimistic that a tax cut and five Federal Reserve Board interest rate cuts will spur the economy that he expects the Nasdaq and the Dow to close the year up 10 percent.
"I am very upbeat about the second half of the year and the end of the year," he said.
Jeffrey M. Applegate, chief investment strategist at Lehman Brothers in New York, calls the rebound "eerily close to the playbook."
"This is how markets operate ... when you get these rallies, they are invariably violent and sharp to the upside," he said.
Applegate believes that the market won't look back this year because it is being fueled by the interest rate cuts. "After the fifth [rate cut], the market has basically never revisited its prior price trough," he said.
History is on the market's side, he said. Last year, the Dow, Nasdaq and S&P; 500 finished in the red. Only four times in the past 100 years - during both world wars, the Great Depression and in 1972 and 1973, when inflation rose rapidly and the economy stalled - has the market finished with consecutive losses. "The market is operating in a very classic way," Applegate said.
He expects the Dow to gain about 3 percent in 2001 and close at 11,500, and the S&P; 500 to rise about 8 percent to 1,400. He does not project the Nasdaq.
Among those who agree that the bottom has been reached, many note that the market is still volatile and difficult to read, and the current rally may not continue.
"It is just hard for me to believe that we had this little hiccup here and we are going to go off in nirvana again," said Robert D. McDorman Jr., who manages the UAM/ICM Small Company Portfolio at Investment Counselors of Maryland in Baltimore. "I am reasonably sanguine about the market; I just don't think it has got this huge upside that people are running around talking about."
McDorman sees too many troubling signs.
Japan, the world's second-largest economy, is limping. California has experienced skyrocketing energy prices that are cutting into businesses' profits and consumers' wallets, and corporate profits, especially those of technology companies, are still weak and uncertain.
"The tax bill has gone through and there is not a whole lot of relief," he said. "Health care costs are screaming again. I am just more skeptical than normal about how steep the recovery can be."
Yet, stocks have risen quickly in recent weeks, and many companies have become too expensive for money managers such as McDorman to buy. A value investor, McDorman scoops up small, well-run companies with depressed stock prices. But many of these stocks are no longer good deals.
"I just think the market has come back too fast," he said. "The general perception ... is the market is still way down, but in fact it isn't."
Clyde Randall, a mutual fund manager at Baltimore-based Allied Investment Advisors, is also ambivalent about the market's strength, but he thinks there are opportunities to buy inexpensive stocks.
"There is a mindset that comes toward the bottom of a market where you have to change from being in the foxhole ... wondering how low this is going to go ... to where are the opportunities," he said. "You have to start making yourself look for the opportunities."