So the American market thinks there's some light out there!!!  Headline from Bloomberg.com:

U.S. Stocks Rise in S&P 500's Best 2nd Quarter Start Since 1938

April 1 (Bloomberg) -- The U.S. stock market posted its best start to a second quarter in 70 years after Lehman Brothers Holdings Inc. and UBS AG said they are raising $19 billion to replenish capital, spurring speculation that banks can weather further credit losses.

The Standard & Poor's 500 Index added 47.48 points, or 3.6 percent, to 1,370.18, rebounding from the worst quarterly performance since 2002. The index hasn't gained more on the first day of the second quarter since a 4.8 percent rally in 1938. The Dow Jones Industrial Average climbed 391.47, or 3.2 percent, to 12,654.36. The Nasdaq Composite Index gained 83.65, or 3.7 percent, to 2,362.75. Almost 10 stocks advanced for every one that fell on the New York Stock Exchange.
.......
The dollar rose against the euro and the yen and Treasury yields climbed as traders pared bets on additional interest-rate cuts by the Fed. The odds implied by futures contracts of a half-point cut in the target for the overnight lending rate between banks by the Fed's April 30 meeting slid to 22 percent from 52 percent yesterday. The remainder of the bets are for a quarter-point cut to 2 percent.

NOTICE - the last sentence says that only a .25% rate cut is predicted by over 75%, the other 22% of the futures market believes in a .5% cut by the Fed on April 30.  We still have a month to go, though!!!

The Wall Street Journal reports things a little differently in their headline (Subscription req'd):

New Hunger for Risk Stirs A Quarter-Opening Rally

April 1, 2008: Investors embraced risk Tuesday, bidding shares sharply higher and unloading safe havens like Treasury bonds and gold to begin 2008's second quarter with a bang.

The market's swings were based largely on the idea that Wall Street's credit crunch is nearing an end. New announcements of write-downs at two major European banks were interpreted by many traders and everyday investors as confirmation that the bloodletting will soon be out of the way.

....

"The bearish sentiment throughout the market lately has gone from pretty negative to more or less neutral" since last week, said Mr. Salamone, who expects the stock market to languish in a trading range for the next few weeks as investors get ready for a wave of first-quarter earnings reports.

Analysts say it remains difficult to determine the value of many financial firms' credit portfolios, which still include complicated bets for which trading has been thin or non-existent, yielding spotty information about prices.

Instead, stock buyers essentially bet a gut feeling Tuesday, based upon the parade of write-downs and quarterly losses that have already piled up on Wall Street, along with recent measures by regulators to stem the crisis. No trader or analyst is willing to say the woes are over for good, but more believe that the steepest losses by banks, brokers and other market players may be in the past.

"The picture is certainly not as bleak as it was before," said Bruce Bittles, chief investment strategist for Robert W. Baird in Milwaukee, Wis. "You had a lot of harsh rumors out there about (financial firms) recently and just a lot of pessimism in general," leaving the market poised for a rally after sellers exhausted themselves.

Mr. Bittles believes the market hit a low in mid-March and is now due for a rally. However, he makes his case based largely upon a belief that the broader economy is due for a rebound, not necessarily that Wall Street's credit losses are over. Mr. Bittles believes economic data may begin improving as soon as this summer, as the effects of recent rate cuts and other moves by the Federal Reserve kick in.

Other experts are more pessimistic. Rich Bernstein, chief U.S. strategist at Merrill Lynch, characterized the beleaguered financial sector as a "value trap" best avoided by investors for now. In the months ahead, he expects to see more signs that the troubles of Wall Street and the U.S. economy are spreading to emerging markets that represent increasingly important trading partners for America.

"If one assumes that the only problems out there are related to subprime mortgages and domestic real estate, then one would be that the worst is over," said Mr. Bernstein. "I'm skeptical of that assumption, though. People are underestimating the depth and the scope of the global credit bubble."

I am with Mr. Bernstein - I would like to believe that the "bloodletting" is over, and maybe it is for the banks and large financial institutions, however I tend to believe that the consumers have more debt and balance sheet equalization to go - consumption is over 70% of our real GDP in the U.S. (just calculated by my students last week in their quiz).

What do I mean?  The amount of debt, unemployment, foreclosures and high price of living (food and energy, especially) seem to reflect more pain on the way.  We shall see, eh?  (Trying not to be a dismal economist!)