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Bull reasserts itself as same drivers spark gains

NEW YORK The bull market, which looked tired Friday after a weak March jobs report, has found a second wind. And the Dow’s revival is being driven by the same bullish drivers that recently pushed it to its best first-quarter gain in 15 years.

Despite a brief scare Friday, when the Dow Jones industrial average dipped 170 points in early trading on news the economy created just 88,000 jobs last month, investors have returned to their buying ways. The Dow closed Tuesday at a fresh all-time high of 14,673.46 after rising 60 points.

What’s driving the Dow higher? A belief that the Federal Reserve’s easymoney policies will continue. The lack of viable alternatives, given that cash and bonds are paying out historically puny yields. Few signs of recession. And the fact stocks are trading at lower valuations than at market peaks in 2007 and 2000.

“Everyone is at the point where they hate cash and bonds,” says Bill Hornbarger, chief investment strategist at Moneta Group. “As long as incoming data indicate the economy is growing, borrowing costs remain low and valuations remain attractive, people are realizing that to get a real return they have to buy stocks.”

But risks remain. The Fed might hint at an exit strategy for its stimulus policy. First-quarter corporate earnings could disappoint. At some point we’ll get a correction, or drop of 10%. “The question,” Hornbarger says, “is how will investors react? Will it feed on itself ? Or will it just be a normal correction?”