Fed Helps Markets, Economy Return to Precrisis Levels; End of Stimulus Feared…U.S. GDP has returned to its precrisis levels and rose to a record in the fourth quarter of 2010. Manufacturing activity is at the highest level since 2004, according to surveys by the Institute for Supply Management and the Philadelphia Fed. The S&P 500-stock index ended last week at 1343.01, more than double its intraday low at the worst of the financial crisis and the highest since June 2008. The Dow Jones Industrial Average has climbed to 12391.25, its highest since June 2008, months before the collapse of Lehman Brothers, which arguably marked the apex of the crisis.

One by one, economic and market indicators have returned to levels that prevailed before the Lehman Brothers meltdown in 2008, effectively turning back the clock on some of the worst effects of the financial crisis.The stock market has doubled from its crisis low. Economic growth and Wall Street pay are at record levels. The yield gap between junk bonds and Treasury debt is at its smallest since 2007. Merger activity is the busiest since 2008, including the recent proposed union of NYSE Euronext and Deutsche Börse AG. Hype over Internet companies is reaching fever pitch, with Facebook Inc. recently valued at $50 billion.By many measures, it’s as if the crisis never happened. Markets and the economy are back to levels last seen well before the collapse of Lehman Brothers Holdings Inc. Some have even returned to their levels during the heyday of 2007. But…
By Mark Gongloff, Feb. 22, 2011 WSJ

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