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Recession's Worse? Let's Buy Some Stocks

While Wednesday's session may have received a little help from the Fed, the market's most bullish run of 2009 looks as intact as ever.

SAN FRANCISCO -- As compelling as the battle over recovering AIG (AIG) - Get American International Group, Inc. Report executive bonuses might be, it clearly has nothing to do with investors' increasing willingness to pay higher prices for stocks.

While Wednesday's session may have received a little help from the

Federal Reserve

, the market's most bullish run of 2009 -- the

S&P 500

is now up 20% since its March 6 intraday lows -- looks as intact as ever.

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For the rest of the month, the watch is on to see how a relatively light corporate news flow and the end-of-quarter performance push will affect the momentum of stocks, which this day touched some nice, round numbers -- 800 on the S&P and



And let's not forget 1500 for the


. With a Wednesday close of 1488, the index is now down just 5.6% in 2009, giving tech investors hope that another push higher could actually have the Nasdaq above water in a matter of days.

The tech index was helped by


(IBM) - Get International Business Machines (IBM) Report

purported plans to buy

Sun Microsystems


, boosting the prey's market cap by nearly $3 billion.

But tech's outperformance of the broader market has been the standard this year, and the IBM-Sun news merely highlights the effect of the strength in tech stocks, rather than being the cause.

The major giants in the sector, IBM,


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(AAPL) - Get Apple Inc. (AAPL) Report



(MSFT) - Get Microsoft Corporation (MSFT) Report



(GOOG) - Get Alphabet Inc. Class C Report

, to name just a few, are awash in cash. This isn't a bad affliction for weathering a recession, and it certainly comes in handy when it's time to buy struggling companies that can open up new markets.

It's those cash hoards that have helped tech stocks give the perception that a low has been put permanently in place around the 1250-1300 level, as the Nasdaq has lifted from there twice in the past four months.

The Fed's announcement on Wednesday that it would buy $1 trillion in securities to shore up the credit markets lifted stocks even higher to that all-embracing feel a couple of hours before the close. Before that, stocks were gliding in their typical surprise-me mode ahead of a Fed announcement.

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The already-forgotten downside of the Fed announcement, of course, is that the actions needed to be taken due to a continuing contracting economy. The Fed said that conditions have gotten worse since January, and termed its near-term outlook weak.

The upside? The deflation/inflation dynamic seems to be fairly well balanced, for now. The government's consumer prices report on Wednesday revealed that the CPI rose 0.4% in February, after a 0.3% rise in January. Over the past three months, consumer prices have fallen at a 0.5% annual rate.

That dynamic isn't so well-balanced for hotel owners, however. The CPI's hotel price index fell 1.8% in February and is now down more than 13% (at an annual rate) in the past quarter.

Take a look at the stocks of


(MAR) - Get Marriott International, Inc. (MAR) Report


Starwood Hotels




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if you want to see a sector that has had a rough 12 months.

Hopefully, those hoteliers had their money in the market this week.