Suddenly, a Markets Turnaround --- Dow Is Up Nearly 20% From a Low, Other Markets More; Is It a Tease?
Investors are ringing in the new year by taking on more risk even though the economic outlook remains grim.</br></br>From junk bonds to currencies, mortgages, stocks and commodities, the markets that were most battered in the second half of 2008 are staging rebounds, sometimes of 10% and more from their low points.</br></br>The breather comes as the U.S. government continues to push investors toward taking more risk because the returns on risk-free assets like Treasury bonds are extremely low. "No question about it, there's an improvement in risk," says Alan Ruskin, chief international strategist at RBS Greenwich Capital.</br></br>But the rallies may prove fragile if early optimism fades amid the challenges of revamping the devastated mortgage industry and stimulating a weak economy prove too daunting.</br></br>On Tuesday, the stock market continued its recovery from November's lows. The Dow Jones Industrial Average rose 62.21 points, or 0.69%, while the Standard & Poor's-500 stock index added 0.78%.