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Steven Syre | Boston Capital

No happy ending yet

There are lots of ways to measure the investor sentiment that drives the stock market.

The direction of famous indexes like the Dow Jones industrial average and Standard & Poor's 500 is the most obvious way. Those indexes provided nearly instantaneous reactions to the Federal Reserve's decision to slash interest rates by a half percentage point on Tuesday, spiking moments after the news and continuing their climb yesterday.

Here's another way: the roster of stocks that hit 52-week highs or lows on a particular day. A whopping 465 US stocks hit new highs at some point during yesterday's session, compared with 203 stocks reaching yearlong lows.

That's a really big number, 465. Even when the broad US stock market was riding highest this year, early in July, it was an exceptional day that produced more than 200 stocks achieving 52-week highs.

Any list of stocks that long obviously includes all kinds of companies. A sample of local companies that hit 52-week highs yesterday includes Raytheon Co. of Waltham, retailer TJX Cos. of Framingham, and electronics hardware producer Analogic Inc. of Peabody.

But businesses that depend on a healthy economy were especially prominent, as you might expect. Energy-related stocks were front and center. They get hurt when an economy slumps, and investors certainly appeared convinced that wasn't going to be the case once the Fed acted. Companies like Schlumberger Ltd., Baker Hughes Inc., Murphy Oil Co., and McDermott International Inc. all reached 52-week highs. Oil Service Holders Trust, a publicly traded portfolio of oil service stocks, achieved a new yearly high price.

A collection of 465 stocks reaching 52-week highs is an unmistakable signal, but that doesn't make it right. As an instant economic analysis, it feels excessively optimistic.

I asked Jim Swanson, chief investment strategist at MFS Investment Management, about all the stocks hitting 52-week highs yesterday. "It suggests that sentiment is overrunning reality," he said. "Things feel better because the Fed marched in and made a bold move. But this is a feel-good, short-term thing. We're not back to the races."

So what's the problem? For one thing, the Federal Reserve's decision to lower rates this week will take months to filter into the economy and, even then, have limited impact.

You might conclude the Fed has signaled it will aggressively fight off a recession before it happens and take comfort in that. But it's too early to buy into a happy ending for this story.

If you think 465 was an impressive number, and you should, here's another one to chew on: 2.6 million.

That's roughly the number of empty houses in America, Swanson said. It's not the number of homes for sale. These are places where nobody's home. That's in the neighborhood of 3 percent of the country's housing inventory.

"We've never seen numbers like that, and the Fed move doesn't change that," Swanson said.

The precarious real estate market is the real threat to the American economy, and that wasn't solved when the Fed cut short-term interest rates by a half percentage point. It's possible the real estate market could work itself out of the jam in time, but no one has any good reason to predict that yet.

Swanson said he's watching for employment figures over the next two months for signs of things to come. Home construction was producing a lot of jobs and giving the economy some of its juice.

It was a good thing the Federal Reserve moved quickly to cut rates, and by more than most people expected. But that doesn't mean all our economic problems disappeared, no matter how the stock market took the news.

BOSTON CAPITAL BLOG Steven Syre is a Globe columnist. Read his daily blog at boston.com/business. He can be reached at syre@globe.com.

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