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The Standard & Poor’s 500 Index may fall beneath its 12-year low on March 9 because consumer spending hasn’t shown signs of a recovery, economist David Rosenberg said.
The S&P 500 rallied as much as 24 percent from an 11-year low of 752.44 on Nov. 20 to Jan. 6 on speculation the economy will recover amid government efforts to rescue banks and automakers. The measure erased those gains and fell another 10 percent to a 12-year low of 676.53 on March 9 as losses at lenders mounted and unemployment continued to rise.
The benchmark index for U.S. stocks plunged as much as 57 percent from an October 2007 record as writedowns and credit losses stemming from the collapse of the subprime mortgage market climbed to $1.47 trillion. The measure has rallied 34 percent since March 9 as the largest banks said they were profitable, the government and the Federal Reserve pledged $12.8 trillion to drag the economy out of recession and policy makers around the world cut interest rates to near zero.
Rosenberg Says U.S. Stock Market May Test March 9 Low
Eric Martin and Erik Schatzker
Bloomberg, May 21 2009