The Dow Industrials rallied 1.3% on Friday putting the three major indexes higher for their fourth straight weekly gains for the first time in more than four months. As was last week, all sectors advanced with basic materials, utilities and energy leading the pack, with all three moving ahead by about 2% on average. While equities meandered most of the week between positive and negative territory, rising oil prices and more monetary easing announced by the European Central Bank provided support late in the week. Oil futures gained 7% to close at $38.50 on Friday and higher commodity prices for copper and steel were encouraging. The ECB announced a bigger-than-expected package of stimulus moves by reducing interest rates and expanding bond buying by 20 billion euros to 80 billion euros per month. The central bank is also in negative interest rate territory, as it will pay banks to borrow money if it is used to lend to others.
The bulls continue to demonstrate that they are in control of the market for now, although average daily volume again was lower than the prior week. Friday’s advance put the S&P 500 Index above the widely watched 2,000 mark. At 2,022 the broad index is slightly above its 200-day moving average, which is a key area for technicians. Pushing stocks nicely past this level will likely be a key target for the bulls, but fundamentals are still not great. Here at home, markets will be paying close attention to any remarks by Federal Reserve members ahead of this week’s scheduled FOMC meeting. An interest rate move is considered to be unlikely, but the after-meeting press conference by Janet Yellen may provide some insight into future rate hikes.
Looking ahead to the upcoming week, in addition to the Fed’s get together, we will be getting a whole slew of economic releases, starting out Tuesday with data on retail sales, producer prices and the review of business conditions in the New York region, as the Empire State Manufacturing Survey is issued. Then, Wednesday will bring reports on housing starts, consumer prices and industrial production. Thursday will then bring data on jobless claims and the report of leading economic indicators from February. While some market watchers believe the worst is over for equities, a lot will depend on any economic improvement translating into higher sales and earnings for companies and providing a lift to valuations.
Here is the answer to last week’s trivia question: Uniroyal Tires (originally U.S. Rubber Co.) and BF Goodrich, are now part of which international tire and rubber company? Michelin, Bridgestone, Goodyear or Pirelli? Answer: Michelin.
Today’s Trivia Question: The ticker symbol “E” belongs to what NYSE traded company? Pharmacy benefits manager Express Scripts, household battery maker Energizer Holdings, Italian energy giant Eni, SpA, or online travel company Expedia.