However, investors haven't been deterred from their cheerfulness lately. They've slipped back into the mode of determining that the recovery will come soon enough and that it's already factored into all intervening bad news we may hear, whether that's for three months, six months or whenever. The second issue that the market is slowly starting to address, and that should become more pronounced in coming weeks, is just how to play the recovery. Some would say smaller companies that could surprise or be bought out are the way to go. But investors are staking their analysis on the basis that AMD is taking market share from Intel.
Investors also seem more willing to attach themselves to the growth sectors again.
For a while, the only areas in which they had any conviction were energy and tobacco, but beyond that, buying technology seemed based on the thin assumption that inventory reductions would happen quickly and the natural obsolescence of products would necessitate investment. Buying cyclicals didn't seem like a great idea, but defensive stocks weren't really exciting anybody either. Then again, it could be that investors are back to playing the Fed rate cut game. More rate cuts mean more economic juice, and Friday's terribly weak unemployment report implies a greater likelihood that the Fed will slash rates by 50 basis points on May 15, rather than 25, which had been the consensus. For now, that seems likely to make people happy.