Stocks in no hurry to dwell on wall of worry

If you had bought Ford Motor Co. shares on March 9, 2009, when they closed at $1.74, you might be feeling flush enough now to consider buying a fast and furious Mustang rather than a thrifty Fiesta.

Ford shares closed at $15.50 on Thursday for a total return of 791 percent since then.

Buying any U.S. automaker’s shares would have been a rather courageous move, given the sorry state of the industry at the time. In fact, the whole stock market had cratered. The major U.S. equity indexes, including the Standard & Poor’s 500, had fallen to new lows in March 2009 since hitting all-time highs Oct. 9, 2007.

Lately, it’s the rare week when those same indexes have one down day, much less two. Crude oil prices topping $112 per barrel haven’t dented stocks so far, nor has the aftermath of the devastating earthquake, tsunami, and nuclear crisis in Japan.

A year ago, a worse-than-expected figure of 1.8 percent for gross domestic product growth for the first quarter might have fanned the fears of an economy in danger of a double-dip recession.

Not Thursday, when the Dow Jones industrial average closed at 12,763.31, up 72.35, or 0.57 percent. The S&P 500 closed at 1,360.48, up 4.82, or 0.36 percent, while the Nasdaq Composite closed at 2,872.53, up 2.65 or 0.09 percent. All were new highs for 2011.

In fact, the Dow hasn’t seen levels like this since May 20, 2008. Of course, the widely watched measure is still about 1,400 points from its all-time high of 14,164.53 reached Oct. 9, 2007.

The Nasdaq remains far below its Internet stock-juiced high of 5,048.62 on March 10, 2000. But Thursday’s close was its highest since December 2000.

Still, investors are not exactly gaga over stocks. In fact, the investor sentiment measures tracked by Bill Stone, chief market strategist of PNC Wealth Management, are muted and the flow of money into equities remains a trickle.

With U.S. debt-ceiling worries, trillion-dollar deficits, European sovereign debt worries, as well as uprisings and unrest in the Middle East and North Africa, why have stocks continued their ascent?

Maybe, just maybe, investors have grown a little more secure about the U.S. economic recovery. PNC identified three areas to watch carefully after the recession officially was declared over as of June 2009: housing, consumer spending, and employment.

Housing, while far from healthy, isn’t hemorrhaging. Consumer spending has rebounded, even if we fret about too much of it going into the cash registers at the grocery and gas station.

As for employment, jobs are being created. Forecasters are looking for 200,000 jobs to have been added in April. The Labor Department, which releases jobs data on the first Friday of every month, says employers created 478,000 jobs during the first quarter of 2011.

Then, there are U.S. corporations themselves that seem to have decided now’s the time to spend the cash they have hoarded over the last three years. Johnson & Johnson’s $21.5 billion purchase of Synthes Inc. and Exelon Corp.’s $7.9 billion acquisition of Constellation Energy Group Inc. this week are one sign of the confidence big business has now.

The number of companies increasing dividend payments is another. ExxonMobil Corp. hiked its dividend by 7 percent Wednesday. Valley Forge-based UGI Corp. raised its quarterly dividend by 4 percent to 26 cents per share Thursday.

Of the 386 companies in the S&P 500 that pay dividends, Standard & Poor’s said 143 have taken steps to increase them so far in 2011. The $20.99 billion in dividend increases announced year-to-date already surpass the $20.65 billion for all of 2010.

In an e-mail, Howard Silverblatt, senior index analyst for S&P Indices, said that while he expected dividend increases to “continue at a brisk pace,” they won’t be at levels of the first four months of 2011.

The extra cash will certainly be welcomed by investors and may make them more confident that U.S. economic growth is sustainable and earnings growth will continue. We’ve lived with vicious cycles for so long it can be hard to recognize when a virtuous one has begun.

Which brings me back to the showroom. What’ll it be? The Mustang or the Fiesta?