stock market Best 1st quarter since 1998

Associated Press

NEW YORK

The bulls weren’t bullish enough.

The stock market just had its best first quarter in 14 years. The surge has sent Wall Street analysts, some of whose forecasts seemed too sunny three months ago, scrambling to raise their estimates for the year.

“That it’s up isn’t surprising. It’s the magnitude,” says Robert Doll, the chief equity investment manager at BlackRock, the world’s biggest money manager.

Doll says stocks could rise 10 percent more before the end of the year. That would be enough to push the Dow Jones industrial average to an all-time high and the Standard & Poor’s 500 close to a record.

For the first three months of the year, the Dow was up 8 percent and the S&P 12 percent, in each case the best start since the great bull market of the 1990s. The Nasdaq composite index, made up of technology stocks, has had an even more remarkable run — up 19 percent for the year, its best start since 1991.

“I don’t think anyone could have predicted this,” says Chip Cobb, a senior vice president at Bryn Mawr Trust Asset Management. For these gains, he says, “I thought it would take all year.”

The jump gives money managers such as Cobb hope that ordinary folks burned by two deep bear markets in a decade will start buying again, propelling the indexes even higher.

In a remarkable act of self-restraint — or foolishness, depending on your view — they mostly have stayed out of the market. One reason they may jump in now is that fear of looming disasters, such as a full-blown debt crisis in Europe or a second recession in the United States, has faded.

Bulls say investors will turn their attention to the only thing that really matters for stock prices in the long run: corporate profits.

Another hopeful sign for gains is that those who have been buying stocks appear to be taking bigger risks than before, suggesting growing confidence.

Last year, investors put much of their money into so-called defensive stocks, such as utilities and health- care companies, which make money in bad times as well as good.

This year, it’s the risky fare that’s being scooped up.

Financial stocks are up 22 percent, the best among the 10 industry groups within the S&P. Technology companies are up 21 percent. Consumer discretionary stocks, such as hotels and cable companies, are up 16 percent.

Utilities are down 3 percent for the quarter, the only group in the red.