Stock Market

Sticking with stocks was a good idea this year. Sticking with junk corporate bonds was an even better idea. The junk, or high-yield, market has rallied powerfully since the stock market bottomed on March 9. Bond prices have surged, driving yields down sharply. The average annualized yield on an index of 100 junk issues tracked by KDP Investment Advisors has plunged to 10.53% as of Friday, down from an 18-year high of 17.7% in December.

Dania Leon's portfolio has surged 55% during the stock market's booming rally over the six last months -- and she couldn't be more nervous. After suffering deep losses last year, the 41-year-old Pasadena resident is grateful to recoup some of her money. But she fears that stock prices have shot up far more than is warranted given the country's still-weak economy and nearly double-digit unemployment rate. "I'm scared, I'm scared, I'm scared," Leon said. "Why are we up, especially with unemployment as high as it is?

The arrival of March is unlikely to bring much relief to a stock market battered by bad news throughout February. Trepidation is more like it after a month that saw the major indexes fall to their lowest levels in 12 years. The Dow Jones industrial average fell for the sixth straight month and is now worth less than half its record high of 14,164.53. All because no one has a clue about when the economy will begin to pull out of recession.

The world's investors rethought the concept of risk in 2007, and the result was a vast divergence in performance among financial markets. Suddenly, to some people Indian stocks looked safer than the U.S. housing market, long considered a pillar of security. Speculators shied away from American junk bonds and small-company stocks but remained ravenous for commodities such as wheat, gold and cotton.

There was no new-year honeymoon for stock investors Wednesday as oil spiked to $100 a barrel and a weak manufacturing report fanned fresh concerns about a possible recession. Gold soared above $850 an ounce for the first time in 28 years and Treasury bond yields dived as some investors ran for cover on the first trading day of 2008.

The stock market staggered through another volatile session Wednesday before finishing mixed. Technology and energy shares helped send the Standard & Poor's 500 index to its lowest close in 14 months. Stocks struggled even though the Federal Reserve's latest survey of regional economic activity should have helped quell recession fears, analysts said. The Fed's "beige book" report said the economy grew modestly from mid-November through December, though at a slower pace than in a previous survey.

Bob Rodriguez was expecting financial markets to come unglued this month. But after making that smart call, he's in the same boat as the rest of us: What to do now? Rodriguez, a veteran money manager who heads the Los Angeles-based First Pacific Advisors mutual fund group, has for the last year been railing against what he saw as off-the-charts risk levels in bond and stock markets.

Xie Xiaolan couldn't tell you what sub-prime loans are, but she knows they must be something bad washed ashore from the U.S. That's what other investors at Guoyuan Securities here were telling her Tuesday as China's stock market fell 7%, on top of a 5% drop the previous day. "I'm too scared to watch," said Xie, a retired accountant who has lost more than $13,500 this week, about one-seventh of her stock investments.

European stock markets mostly rebounded Tuesday, getting a boost in late trading from the U.S. Federal Reserve's surprise interest rate cut. There was no sign that the European Central Bank was ready to join the Fed in driving short-term rates lower, but some analysts said the Bank of England was likely to ease credit soon. After plummeting Monday amid a global sell-off tied to worries about the U.S.

The stock market ended a tumultuous week with a sharp decline Friday, retreating after two days of stunning gains amid speculation of more credit-market losses. The Dow Jones industrial average fell 171 points but still managed to record its first weekly advance of 2008. An index of financial stocks in the S&P 500 slid 2.5% on Friday for the biggest drop among 10 industries. Thursday's announcement by Societe Generale of a $7.