THE COMEBACK CONTINUES, from Bob Doll, vice chairman and chief equity strategist for fundamental equities, BlackRock

Stocks advanced yet again last week (for the fifth consecutive week), benefiting from a backdrop of generally strong economic news. For the week, the Dow Jones Industrial Average climbed 0.7% to 10,927, the S&P 500 Index advanced 1.0% to 1,178 and the Nasdaq Composite rose 0.3% to 2,403. With these gains, stocks are now up more than 10% from their early February lows.   Data released last week was generally in line with an economy that is firmly improving. The ISM manufacturing survey for March was above the 50 mark for the eighth consecutive month and is now at its highest level since the summer of 2004. Forward-looking indications are that strong production levels should continue. Also, data released last week showed a continued comeback in consumer spending levels and in retail sales, also positives for the broader economy. Even the beleaguered housing market has been showing improvements, with the Case Shiller home price index for January showing the eighth month of upward moves.   Perhaps most important, last week also saw the release of the March payrolls report, which showed that 162,000 jobs were created for the month, 123,000 of them from the private sector with the rest from the hiring of census workers. Additionally, the report also showed some upward revisions to private sector hiring from January and February. By year-end, we expect the unemployment rate will have fallen modestly, perhaps to around the 9% level.   All of this is not to say that the economy and the markets will experience smooth sailing from here. In recent weeks, we have been highlighting some of the downside risks, including ongoing credit-related issues (chiefly in the euro region) and the possibilities of premature policy tightening (chiefly in China). To these, we would add a slowdown in the rate of economic growth in Asian economies. These markets have been key drivers of global economic growth in recent years, but have been foundering a bit over the last six months. Additionally, we remain concerned about protectionist sentiment from Washington, DC. In all, equity markets have not been overly concerned about these risks, but these are trends that bear close monitoring.

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