(May 7) – “Even though Nasdaq 5000 — 4000 and 3000 — are sadly distant memories, and last year’s investment darlings now lie amid the ruins, the participants in Barron’s latest Big Money poll remain resolutely bullish about the stock market’s future,” writes Jacqueline Doherty in this week’s issue of Barron’s.

“They’ve shrugged off worries about diminished corporate earnings and rising unemployment, cutbacks in capital spending and escalating debt.”

“Instead they’ve placed their faith in the power of the Federal Reserve’s four interest-rate cuts, and the never-say-save American consumer, to bail out the U.S. economy and the market. And, in recent weeks, their optimism has been richly rewarded.”

“Since the major indexes hit their 52-week lows in early spring, the Dow Jones Industrial Average has jumped more than 1,400 points, or 15%, to around 10,800, finally edging into positive territory for the year. The Nasdaq has done even better in this span, climbing more than 500 points, or 31%, to about 2150.”

Stocks fell Friday morning amid fears that rising unemployment would plunge the economy into recession, but later rebounded as investors concluded the jump in April’s unemployment rate, to 4.5%, will prompt the Fed to cut rates moreaggressively.”

” ‘Rule No. 1 is don’t fight the Fed. Rule No. 2 is don’t forget Rule No.1,’ quips Larry Haverty, a senior vice president with Boston-based State Street Research & Management.”

“As a group, the Big Money respondents have been bullish through the ups and downs of the past three years. But the degree of bullish sentiment, like the market itself, has undergone some major swings.”

A record-setting 64% of poll participants, professional money managers all, consider themselves bullish about the market’s prospects in the next six months. That proportion has swelled from 59% last May, and 38% in May 1999, as many fence-sitters over time have eased themselves into the bullish camp.”

“Bears, on the other hand, seem to be nearing extinction. Only 13% of the latest crop of respondents call themselves bearish about the near-term outlook for stocks.”

The managers historically have been more cautious in their 12-month view, and that’s the case once again in the May poll. The proportion of respondents who deem themselves bullish about the coming 12-month stretch has fallen to 41%, compared with a peak of 54% in November 1999.”

“But the drop is not necessarily a bad sign for stocks. Bullish sentiment last fell dramatically in the November 1998 poll, on the heels of the Asian contagion — but just ahead of a powerful market rally.”