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This recession is going to reshape America for generations, including the way we live and work. What will the future look like? Who will be the winners and losers?

Obviously you could make a lot of money if you guess right.

It's only six months into the crash, but the stock market is already starting to make some early calls. The market isn't a perfect seer of the future, but it has a pretty good track record. And a few of the calls it's making now are challenging the conventional wisdom.

IPhone nation lives. Shares in cellular companies tanked when the crisis first hit. Sprint crashed 85%. Apple fell by more than half. The conventional wisdom: Cellular contracts and fancy handhelds are very expensive. Even a $60 a month habit is costing you $720 a year. Desperate consumers would drop these plans, or scale back sharply, as they were forced to slash their household budgets.

So far? The market's having a dramatic rethink. Shares in cellular companies have jumped about 40%, on average, from their November lows. During that time the rest of the market has gone nowhere. Sprint's doubled from its distressed levels. Apple, Black Berry's Research In Motion, even Palm have risen a long way.

The reason: Maybe post-crash America won't junk its fancy handhelds after all. "We've learned this recession that wireless has become more of a necessity," says analyst Tim Horan at Oppenheimer. "We haven't seen a lot of people dropping their cellphone service."

The daily latte may not be toast. Starbucks stock was another early victim of the crash. The shares collapsed. Everyone beat them up last fall, because an expensive latte habit is one of the easiest budget cuts a hard-pressed consumer can make.

The market's rethinking this one, too. Starbucks stock has now jumped 55% from the lows. Sure, sales and profits are well down. But management is fighting back with cost savings and new initiatives. More than 750,000 people have signed up for Starbucks loyalty cards, triple what the company expected. (And that's a wireless play too: They give you some free WiFi with your beverage.) The coffee shop has become an important part of many people's day. Shares in rival coffee chain Peet's are up about 10% too.

Dotcoms strike back! Shares in most regular retailers have slumped over the past six months, for obvious reasons. Expect more bricks and mortar stores to close as overstretched consumers retrench.

But when it comes to online retailers, the story changes. Amazon stock, which tanked initially, has doubled since November. Hype over the Kindle electronic book reader has helped. Online jeweler Blue Nile has also bounced.

And look at Netflix – its stock just hit a record high, surging over $40 for the first time. The Internet-based movie rental company is one of the big winners of the recession so far, as consumers stay home and order in movies. And it makes sense: A Netflix subscription, typically about $14 a month, is much cheaper than cable.

Historians note that many of the stocks which did best during the Great Depression were actually so-called "growth" companies, because they were the ones conquering the future. When a hurricane sweeps through a forest it knocks down a lot of the older, weaker trees. The younger ones survive and prosper. And so it may be in the economy.

Write to Brett Arends at brett.arends@wsj.com

Labels: amazon, iphone, netflix, stock trading investing

NEW YORK - Wall Street extended its rally into a third day as investors took in stride a cut in General Electric Co.'s credit rating.

Standard & Poor's lowered GE's top rating one notch because of problems at the company's lending arm. However investors were relieved that S&P said it was not considering further credit downgrades for the blue-chip company, the oldest member of the Dow Jones industrials.

GE stock jumped more than 13 percent, helping drive the Dow back above the 7,000 mark.

"It's oddly encouraging" that GE maintained a stable rating after its downgrade, said Kim Caughey, equity research analyst at Fort Pitt Capital Group. S&P and other ratings services have been trying to act more aggressively following criticism over the past year for failing to identify risks in subprime mortgage investments, she noted.

Another big gainer in the Dow was General Motors Corp., which has been borrowing money from the government to stay in business. GM's chief financial officer said the company will not need the $2 billion loan for March it previously requested. GM rose nearly 13 percent.

In midafternoon trading, the Dow Jones industrials rose 151.01, or 2.2 percent, to 7,081.41.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 16.58, or 2.3 percent, to 737.94, and the Nasdaq composite index rose 27.26, or 2 percent, to 1,398.90.

The Russell 2000 index of smaller companies rose 12.62, or 3.5 percent, to 378.92.

Advancing stocks outnumbered decliners by more than 4 to 1 on the New York Stock Exchange, where volume came to 661.9 million shares.

The market rose modestly Wednesday after soaring on Tuesday in response to news that Citigroup Inc. was profitable in January and February. It was the market's first two-day advance in more than a month.

Bank stocks continued to climb Thursday - Citigroup rose 4.5 percent, Wells Fargo & Co. rose 3 percent, Bank of America Corp. rose 9.5 percent, and JPMorgan Chase & Co. rose 6.6 percent.

Despite those gains, investors are still anxiously awaiting details from Treasury Secretary Timothy Geithner about a plan for dealing with the "toxic" loan-backed assets that are still sitting on banks' books. Geithner spoke at a Senate hearing Thursday but mainly about the federal budget.

The economic news was mixed but investors focused on a better-than-expected report on retail sales.

Sales fell 0.1 percent in February, which was far less than less than the 0.5 percent slide economists had predicted. The government also revised January's performance to show a 1.8 percent increase, the biggest rise in three years and stronger than the 1 percent gain that was originally reported.

But there was some bad news about the economy kept coming on Thursday. First-time claims for unemployment benefits rose last week to 654,000 from 639,000 the week before, more than analysts had expected.

Investors are also aware that much of this week's rebound can be attributed to technical factors.
The selloff that hurled the stock market to 12-year lows last week was driven largely by short-selling, when a trader bets on a stock falling by selling borrowed shares.

Traders have now been covering those short bets by buying stocks, after the Securities and Exchange Commission said it was considering reinstating the "Uptick Rule." The rule, eliminated in 2007, aimed at curbing short-selling by only allowing it when a stock edged higher.

Short-sellers "are having to think long and hard about how they're going to do business going forward," Caughey said. Lately, driving stocks lower through short-selling has "been like shooting fish in a barrel," she said.

The pharmaceutical industry was driven higher Thursday by more acquisition news.
Switzerland's Roche Holding AG agreed to buy the rest of Genentech Inc. for $46.8 billion, while Gilead Sciences Inc. agreed to buy CV Therapeutics Inc. for $1.4 billion. Earlier this week, drugmakers Merck and Schering-Plough agreed to merge in a $41 billion deal.

Bond prices fell as stocks rose. The yield on the benchmark 10-year Treasury note fell to 2.85 percent from 2.91 percent.

The dollar rose against other major currencies. Gold prices also rose.

Light, sweet crude for April delivery rose $3.07 to $45.40 a barrel on the New York Mercantile Exchange.

Overseas markets were mixed. Britain's FTSE 100 rose 0.5 percent, Germany's DAX index rose 1.1 percent, and France's CAC-40 rose 0.8 percent. Japan's Nikkei stock average dropped 2.4 percent, while Hong Kong's Hang Seng index rose 0.6 percent.

By MADLEN READ, AP Business Writer Madlen Read, Ap Business Writer

Labels: dow jones, ge, rebound, stock trading investing, wall street

NEW YORK (AP) -- Investors turned cautious again Monday as a staggering $61.7 billion in quarterly losses at insurer American International Group Inc. touched off fresh worries about the health of the nation's financial system.

The Dow Jones industrial average fell below 7,000 for the first time in more than 11 years as investors grew pessimistic about the health of banks, and in turn the economy. The blue chips hadn't traded below 7,000 since Oct. 28, 1997, and last closed below that mark on May 1 of that year.

The credit crisis and recession have now slashed half the average's value since it hit a record high over 14,000 in October 2007.

Investors are fleeing financials after the government said it would give AIG another $30 billion in loans, besides the $150 billion it has already given the company.

Investors are worried about European financial companies, too.

HSBC PLC, Europe's largest bank by market value, reported a 70 percent drop in 2008 profit and said it needs to raise $17.7 billion and cut 6,100 jobs.

"As bad as things are, they can still get worse, and get a lot worse," said Bill Strazzullo, chief market strategist for Bell Curve Trading. Strazzullo said he believes there's a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000, respectively.

The "game-changer," he said, will be the housing market and whether it can stabilize.

In midmorning trading, the Dow fell 153.96, or 2.18 percent, to 6,908.97.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 17.18, or 2.34 percent, to 717.91, and the Nasdaq composite index fell 23.42, or 1.70 percent, to 1,354.42.

Mixed economic readings on Monday weren't enough to prop up stocks.

Personal spending rose 0.6 percent in January and incomes rose 0.4 percent, while construction spending fell 3.3 percent, more than twice as much as economists expected. Manufacturing contracted in February for the 13th straight month, but at a slower pace than expected.

Meanwhile, billionaire investor Warren Buffett wrote in his annual letter to investors Saturday he is sure "the economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond -- but that conclusion does not tell us whether the stock market will rise or fall."

Tim Paradis, AP Business Writer

Labels: dow jones, stock trading investing, stocks, wall street

LONDON (Reuters) - World stocks fell to nearly six-year lows on Monday and the dollar hit 3-year peaks after a 12.5 billion pound ($17.75 billion) rights issue by HSBC (HSBA.L) and another cash injection to U.S. insurer AIG (AIG.N).

Oil fell more than 3 percent while government bonds rose across the board after HSBC, Europe's biggest bank, launched the rights issue to shore up its balance sheet after it reported a 18 percent fall in adjusted pretax profit for 2008 and cut its dividend.

American International Group (AIG.N) is set to take a $30 billion lifeline from the U.S. government as the embattled insurer is expected to report the biggest quarterly loss in corporate history of about $60 billion later on Monday.

The AIG move follows a new rescue plan for Citigroup (C.N), adding to fears that more financial firms may need similar bailouts.

"There's a roll call of reasons to stay risk averse -- the news from AIG, HSBC and worries about Eastern Europe and that is benefiting the dollar," UBS currency strategist Geoffrey Yu said.

Concerns about the impact of a sharp economic deterioration in Eastern Europe have also weighed on the euro and euro zone stocks in recent weeks.

European Union leaders rejected a mass bailout of central and eastern European countries at a summit on Sunday, but held out the prospect of bringing them under the protection of the euro zone more quickly. MSCI world equity index (.MIWD00000PUS) fell 1.9 percent to hit its lowest level since April 2003.

The index lost more than 10 percent last month, compared with a rise of 0.1 percent in February 2008.

The FTSEurofirst 300 index (.FTEU3) fell 3.2 percent. HSBC shares fell 11 percent in early trade.

The dollar index (.DXY), which measures the currency's strength against a basket of major currencies, hit its highest level since April 2006. The single currency fell to $1.2562.

March Bund futures rose 65 ticks, benefiting from flows seeking safer investments.

"Clearly the environment for fixed income, Bunds in particularly, is still extremely bullish. We've strong faith in our call that historic low in yields are still ahead of us," Christoph Rieger, short-end rate strategist at Dresdner Kleinwort in Frankfurt.

Emerging stocks (.MSCIEF) fell 3.5 percent and U.S. crude oil fell 3.6 percent to $43.15 a barrel.

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