Market Talk

The US stock market’s been on a wild roller coaster ride throughout the last six months, but doesn’t have much to show for it at 2009’s midway point.

Dow industrials posted their best quarter since 2003, gaining 11% for the last three months, but still remains down 3.8% for the year. The S&P 500 gained 15% in the second quarter, its best performance since 1998, but is only up 1.8% for the year.

Many parts of the credit markets showed improvement, banks and brokerage firms were able to raise cash and emerging markets and commodities were big winners in the second quarter, WSJ notes. However, investors still remain doubtful about a sustained recovery.

From WSJ:

But while the waves of fear that had sent stocks to their lows have abated, the focus now is on the market’s economic and profit underpinnings. Investors are looking for a better end to the year, and even those expectations are muted.

Bulls and bears alike generally agree that for stocks to post a significant rally during the second half will require convincing evidence not only that the U.S. economy’s decline has slowed but that activity will begin to turn higher by year-end. Corporate profits, meanwhile, will need to at least match forecasts for an upswing through the rest of the year to even justify current market values.

It was certainly a volatile quarter for the S&P 500 as it was down 25% as of March 9, but has since rallied 36%, market research firm Bespoke Investment Group notes.

And despite sitting in positive territory, only three of the index’s 10 major sectors are positive this year, firm notes. Technology’s up 24%; materials have gained 12.3%; and consumer discretionary has risen 7.5%.

Industrials have dropped the most, off 7.7% and financials are down 4.8%.

To be sure, much of the upward movement in stocks occurred in the first six weeks of the quarter, while stocks essentially traded sideways for remainder of the period, LA Times Money & Co. blogger Tom Petruno notes.

“Why the stall?” he asks. “Many investors clearly aren’t persuaded that those economic ‘green shoots’ of spring will amount to enough to justify pushing share prices higher.”

And the fact that stocks have essentially traded sideways throughout much of the last two months after the big run-up only reinforces the feeling that “if you missed it, you missed it,” Petruno adds.

Stock futures poised to start the third quarter on a strong note, although futures have come off their highs after the ADP employment report shows private-sector jobs in June declined 473,000, more than economists expected. Dow futures up 50; S&P 500 futures up 5.