Stocks at new 2009 highs

The S&P 500 has gained 55% since the March 9 low.

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When Wall Street nearly collapsed

Would panic prevail? That was the question gripping the world in the days surrounding the fall of Lehman Brothers on Sept. 15, 2008. One year after that terrifying Monday, the people who struggled to cope with the financial crisis share what they were thinking as chaos broke out.

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The Dow is up 47% since the March 9 low.

NEW YORK (CNNMoney.com) -- Major stock indexes ended at their highest points of the year Tuesday after a stronger-than-expected retail sales report and comments from Fed chief Ben Bernanke helped offset concerns that the rally has outpaced the recovery.

The Dow Jones industrial average (INDU) gained 57 points, or 0.6%, ending at its highest point since last Oct. 6. The S&P 500 (SPX) index rose 3 points, or 0.3%, ending at its highest point since Oct. 6. The Nasdaq composite (COMP) climbed 11 points, or 0.5%, and closed at its highest point since Sept. 26.

Stocks churned in the morning but managed some gains in the afternoon as investors digested comments from Fed chief Ben Bernanke that the recession is "very likely over."

Financial, industrial and select commodity stocks led the advance, including Dow components Alcoa (AA, Fortune 500), American Express (AXP, Fortune 500), Caterpillar (CAT, Fortune 500), Boeing (BA, Fortune 500) and General Electric (GE, Fortune 500).

Other than a little selling in the first few days of September, stocks have been extending the 2009 run.

"I think what we're seeing is continued evidence of anxiety about all the cash on the sidelines missing the early stages of a bull market," said Hank Smith, chief investment officer of equity at Haverford Trust.

He said that this factor was bringing buyers in at the dips and was likely to keep doing so in the weeks ahead.

Stocks managed gains Monday, but they were slight as investors continued to worry that the economic recovery was trailing the market surge.

"I think we can continue to move higher through year end, but I don't think we can do it with second-tier leadership like Citigroup and AIG," said Terry Morris, senior equity manager, National Penn Investors Trust.

He said high-quality companies with strong balance sheets need to take the lead.

The Consumer Price index, a measure of consumer inflation, is due Wednesday morning. CPI is expected to have risen 0.3% in August after showing no change in July. The so-called core CPI is expected to have risen 0.1% after rising 0.1% in July.

August capacity utilization and industrial production are also due in the morning, along with the weekly oil inventory report.

Bernanke: Speaking at the Brookings Institution in Washington, Bernanke said the recession is "very likely over," but that the pace of the recovery will be moderate next year and that it will still feel like a weak economy for some time.

While the Fed chairman's comments were essentially a retread of another recent speech, they appeared to give the markets a lift.

Retail sales: August retail sales rose 2.7%, the Commerce Department reported, reflecting the impact of the government's Cash for Clunkers auto stimulus program. Even without auto sales, the retail numbers were strong, suggesting consumer sentiment is improving.

The rise surprised economists who were looking for an advance of 1.9%, according to Briefing.com.

Other economic news: The Producer Price Index (PPI), a measure of wholesale inflation, rose 1.7% in August after falling 0.9% in July. Economists thought it would rise 0.8%. The so-called Core PPI, which strips out volatile food and energy prices, rose 0.2% after falling 0.1% in July. Economists thought it would rise 0.1%.

The Empire State index, a regional read on manufacturing, rose to 18.8 in September, topping forecasts for a rise to 15. The index stood at 12 in August.

July business inventories fell 1% after falling 1.1% previously. Economists thought it would fall 0.9%.

Company news: Citigroup (C, Fortune 500) wants Treasury to sell off part of its roughly 34% stake in the financial firm, according to published reports. Citi is also looking to issue new shares to the public as part of a multibillion-dollar stock offering.

Since the collapse of Lehman Bros. last year, the government has poured $45 billion into the firm and agreed to share losses on a big piece of the bank's bad assets. Citi shares fell 9% Tuesday.

Best Buy (BBY, Fortune 500) reported weaker quarterly earnings that missed analysts' forecasts on higher revenue. The company also said that sales at stores open a year or more fell 3.9% in the fiscal second quarter.

The company's forecast was mixed. Best Buy lifted its fiscal 2010 earnings outlook to a range of $2.70 to $3 per share, but that means the midpoint of $2.75 is short of analysts' current forecast for earnings of $2.76 per share.

The electronics retailer also said it expects total revenue of $48 billion to $49 billion, versus analysts' forecasts for $47.8 billion. Best Buy shares fell 5%.

One year later: Tuesday marked the first anniversary of the collapse of Lehman Brothers and the shotgun wedding buyout of Merrill Lynch by Bank of America -- events widely seen as the accelerant that pushed the recession into a full-blown crisis.

On that day last year, credit seized and panicked investors dumped financial shares, leading to a broad selloff that sent the Dow plunging 504 points.

Stocks were tumultuous through that week but managed to end with only modest declines after a series of government actions. Those included the Federal Reserve saving AIG (AIG, Fortune 500) from bankruptcy and the forming of an early version of the TARP bank bailout plan.

But any relief investors felt at the end of that week soon gave out. Stocks plummeted in the six months after the collapse, culminating March 9 with the S&P 500 and Dow bottoming out at 12-year lows and the Nasdaq hitting a more than six-year low.

Since March, the Dow has gained 47%, the S&P 500 gained 55% and the Nasdaq composite has gained 65%.

Year-over-year, the major indexes are still down, with the Dow and S&P 500 roughly where they stood in early October of last year and the Nasdaq where it stood about a week earlier, in late September.

President Obama spoke on Wall Street Monday, urging market pros to rebuild their relationship with the public and make sure that they don't engage again in the kind of behavior that led to the crisis.

For a look at what the government has been doing over the last year to manage the crisis, click here.

Currency and commodities: The dollar fell versus other major currencies, resuming its decline against the yen and euro.

The falling greenback boosted dollar-traded commodities.

U.S. light crude oil for October delivery rose $2.07 to settle at $70.93 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose $5.20 to settle at $1006.30 an ounce.

Bonds: Treasury prices fell, raising the yield on the benchmark 10-year note to 3.45% from 3.42% late Monday. Treasury prices and yields move in opposite directions.

World markets: Global markets were mixed. In Europe, London's FTSE 100, France's CAC 40 and Germany's DAX all gained modestly. Asian markets were mixed, with Japan's Nikkei higher and the Hong Kong Hang Seng lower.

Market breadth was positive. On the New York Stock Exchange, winners topped losers seven to three on volume of 1.49 billion shares. On the Nasdaq, advancers topped decliners by more than four to three on volume of 2.4 billion shares.