Wall Street surged Thursday as investors looked past a sharp rebound in oil prices and focused on comforting news about the economy -- better-than-expected retail sales and a drop in the number of laid-off workers seeking unemployment benefits.
The Dow Jones industrials rose almost 214 points, posting its biggest daily point gain since April 18.
The market got an additional boost from word that Verizon Wireless will acquire Alltel Communications LLC for $5.9 billion in cash and the assumption of $22.2 billion in debt.
Wow! A company is going to buy another company that is $22 billion in debt for $6 billion in cash. Where else but in America would we consider buying a company for $6 billion so it can then turn around and pay 4 times that much in bills, a "good investment"?
And the good news just kept on coming today:
Not all of Thursday's news was positive, however. Even though the Labor Department said applications for unemployment benefits declined last week by 18,000 to 357,000, its four-week average rose to a four-month high.
Other worrisome developments included an almost $6 spike in crude oil prices to above $128 a barrel, a steep tumble by the dollar against the euro, rising bond yields, a new record high in corn prices, and a Mortgage Bankers Association report showing that nearly 1 percent of mortgages fell into foreclosure between January and March.
But don't worry, there are logical reasons for ignoring all this bad news.
Alfred E. Goldman, chief market strategist at Wachovia Securities, contends the market is entering a stronger period because of investors' ability to not overreact to some bad news such as rising oil prices and a weak dollar and to focus instead on the retail sales and jobless claims numbers.
"What investors are doing is looking beyond the valley to the peaks ahead," he said. "The big picture is that we're in a market that's transitioning from a bear to a bull."
You mean THE Alfred E. Goldman of Wachovia Bank is saying were going to be OK? Well, when Alfred E. Goldman of Wachovia bank, the fourth largest bank in America speaks, you can, er.. take it to the bank.
Wait a minute. Alfred E. Goldman of THIS Wachovia bank?
Wachovia shares hit 52-week low
Jacksonville Business Journal
Wachovia Corp. shares dropped to an annual low Tuesday, a day after the bank announced Ken Thompson had retired as chief executive at the request of the company's board.
Wachovia's stock, which has traded between $22.72 and $54.54 per share over the last year, closed at $21.92 per share Tuesday.
The stock, which closed Monday at $23.40 per share, dipped as low as $21.04 per share Tuesday.
Until last month, when he was stripped of the chairman's title at Wachovia, Thompson had held both the chairman and CEO posts at the bank since 2000.
His sudden retirement follows increased losses at the bank. Wachovia reported a first-quarter net loss of $708 million, or 36 cents per share.
Wachovia's recent financial woes have revolved largely around the bank's massive exposure to the declining mortgage market, a byproduct of its 2006 acquisition of California thrift Golden West Financial Corp.
Now I'm no chief market strategist at Wachovia Securities, but it seems to me that they bought a company with many times its purchase price in debt, just like Verizon.
With sound financial thinking like that, Utopia is just around the corner.