NEW YORK, Jul. 1, 2009 (Xinhua News Agency) -- Although Wall Street rebounded strongly and posted a three-month rally from March to May after raching 12-year lows March 9, analysts expect the U.S. equity market to be boring in the second half of 2009.
According to media reports, investors have snapped up stocks recently on speculation that the beginning of the economic recovery is not far away.
U.S. Federal Reserve Chairman Ben Bernanke said in April that "green shoots" were showing up on the economic landscape "as some confidence begins to come back."
Are the economy's "green shoots" real or imagined? Compared with expectations earlier this year, investors seem more optimistic as oil prices retreated to about 35 U.S. dollars a barrel in February and the banking sector and consumer confidence showed improvement.
U.S. stocks started to rebound on good news from the battered banking sector. Bank of America's (NYSE:BAC) Ken Lewis, JPMorgan Chase's (NYSE:JPM) Jamie Dimon and Citigroup's (NYSE:C) Vikram Pandit are among CEOs saying their banks were in the black early this year.
The U.S. government in May reassured investors, saying that 10 of the top 19 banks will need to raise a total of 74.6 billion dollars in capital over the next six months, less than what some analysts had estimated. Also, some banks have been able to repay government money they took last fall after the Lehman Brothers bankruptcy threw the financial system into disarray.
U.S. Treasury Secretary Timothy Geithner said "the financial system is starting to heal."
Meanwhile, Alan Valdes, vice president of the Hilliard Lyons investment firm, credited a drop in oil prices with spurring the economy.
"Remember last summer it was the housing market that got into that mess, but it was oil that exasperated it. When oil was 140 dollars a barrel, that squashed the American public," Valdes said.
The decline in energy prices will lower living costs and enable consumers to start spending again.
Meanwhile, a batch of economic data suggests there is an increasing number of favorable factors in the economy. Pending home sales have been rising since February and house prices have declined at a lower pace, raising hopes that the market has bottomed out.
In addition, while the U.S. unemployment rate climbed to a 25-year high of 9.4 percent in May, it was not as bad as some analysts had estimates.
However, investors have grown nervous that the rebound won't be as robust as they had envisioned.
"We are still not out of the woods and there are lots of uncertainties.
