Rally tally: What the bears have left behind in stocks’ surge

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Wall Street’s bears have left some serious money on the table by refusing to believe the market’s spring rally is for real.

Today, after another strong start, stocks have given up most of their gains. The Dow Jones industrial average was up 21 points, or 0.3%, to 8,207 just before noon PDT, after being up as much 1.5%.

But as the chart below shows, investors who have sat out the rally that began on March 10 -- and balked at buying on the frequent pullbacks along the way -- have regretted it.

The Standard & Poor’s 500 index was up 29.1% through Wednesday from its 12-year low reached March 9.

Not surprisingly, some of the most beaten-down stock sectors in the bear market have snapped back the most from the March lows -- including real estate investment trusts (REITs) and small and mid-sized stocks.

The bearish case is that this is a flash in the pan. But unlike other rallies since the bear market began in October 2007, this one has been underpinned by plenty of data suggesting that the economy either is improving modestly or at least has stopped sinking at a faster pace.

Today, an index of April manufacturing activity in the Chicago region jumped to 40.1 from 31.4 in March. Economists had expected a reading of 35. Although any reading under 50 indicates that activity is contracting, the index is headed in the right direction for investors who want to believe that the worst of the recession is behind us.

And Wall Street, let’s not forget, is supposed to look ahead -- not behind.

The Chicago manufacturing report ‘fails to provide a finite answer to the second-half-recovery debate, but it will keep the growth bulls confident in their analysis,’ said Steven Ricchiuto, economist at Mizuho Securities in New York.

-- Tom Petruno