The Week In Review


The stock market ended an upbeat week on a positive note. The Dow Jones Industrial Average (+0.8%) paced the advance while the S&P 500 gained 0.5%. The Nasdaq (+0.1%) lagged, but was able to finish at its highest level since late 2000.
Today's advance capped an impressive week during which the benchmark S&P 500 gained 2.3%. Even though stocks rallied sharply, it is worth noting that all five sessions of the week saw below-average volume while bellwether groups like financials and transports struggled to keep pace with the broader market. The financial sector added just 0.2% on Friday, extending its weekly gain to 1.6%. For its part, the Dow Jones Transportation Average (+0.3%) added 0.9% for the week.
Similar to financials, other top-weighted sectors like health care (+0.4%) and technology (+0.2%) lagged while consumer discretionary (+0.6%), energy (+1.5%), industrials (+0.7%), and materials (+0.7%) picked up the slack.
The energy sector drew considerable strength from its largest member, ExxonMobil (XOM 94.11, +2.68), which surged 2.9%. The Dow component regained its 100- and 200-day moving averages in a move that was aided by an ISI Group upgrade to 'Buy' from 'Neutral.' On a related note, crude oil ended little changed at $100.29/bbl.
Elsewhere among commodities, precious metals remained on a torrid pace. Gold futures posted their seventh day of gains, climbing more than 5.0% in that timeframe. Meanwhile, silver capped an eight-day run that saw the metal jump nearly 8.0%. This translated into another strong session for gold miners as the Market Vectors Gold Miners ETF (GDX 26.35, +0.48) rose 1.9%.
Mining shares contributed to the outperformance of the materials sector, which also benefitted from gains among steelmakers after Cliffs Natural Resources (CLF 23.16, +1.26) reported better-than-expected results.
Staying on the earnings theme, apparel retailer V.F. Corp (VFC 56.85, -3.04) slumped after announcing disappointing results and issuing a profit warning. The stock tumbled 5.1%, which kept a lid on its peers. The rest of the discretionary sector held up well with help from homebuilders. The iShares Dow Jones US Home Construction ETF (ITB 25.21, +0.28) rose 1.1%.
Interestingly, builder shares outperformed even as Treasury yields inched higher. The benchmark 10-yr yield rose one basis point to 2.74% after ending last week at 2.68%.
As mentioned earlier, trading volume was well below average with only 609 million shares changing hands at the NYSE. Today's final tally represented the lowest total since January 3.

Today's economic data included three reports:

Export prices, excluding agriculture, ticked up 0.2% in January after increasing 0.3% in the prior reading. Excluding oil, import prices rose 0.3%, which follows last month's downtick of 0.1%.
Industrial production declined 0.3% in January after increasing 0.3% in December while the consensus expected an increase of 0.3%. Once again, the hard economic data did not mesh with the results in the ISM report and the related regional surveys. Those reports showed solid, albeit slightly unsteady production levels in January. Instead of translating into slightly positive growth, however, actual manufacturing production fell 0.8% in January. That was the largest drop since May 2009. Making matters worse, manufacturing production growth was revised down for each month going back to October. After the revisions, fourth quarter manufacturing production only increased 4.2%, down from an originally reported gain of 6.2%. This comes after the ISM Production Index was recorded above 60 during that entire time, suggesting manufacturers are definitely not doing what they are saying in the surveys. The motor vehicle sector was hit especially hard in January. Assemblies fell by 1.0 million, from 11.64 million in December to 11.62 million in January.
The preliminary reading for the University of Michigan Consumer Sentiment Index for February was unchanged at 81.2 while the consensus expected the index to fall to 80.2. The Current Conditions Index weakened slightly, falling from 96.8 in January to 94.0. This was offset by an increase in the Expectations Index from 71.2 to 73.0 in February.
Bond and equity markets will be closed on Monday for Presidents' Day.

Nasdaq Composite +1.6% YTD
S&P 500 -0.5% YTD
Russell 2000 -1.1% YTD
Dow Jones Industrial Average -2.6%
Week in Review: Stocks Charge Ahead Amid Light Volume

The stock market began the week on a subdued note. The Dow Jones Industrial Average, Nasdaq, and S&P 500 posted gains between 0.1% and 0.5% with the Nasdaq Composite ending in the lead. Overall, the session had a 'wait-and-see' feel as many participants stuck to the sidelines ahead of Janet Yellen's testimony on monetary policy. The limited participation was reflected in the trading volume as only 640 million shares changed hands at the NYSE.

On Tuesday, the stock market rallied steadily with the Dow Jones Industrial Average (+1.2%) providing the lead. Thanks to the advance, the Dow narrowed its 2014 loss to 3.5% while the Nasdaq (+1.0%) was able to swing from a loss to a year-to-date gain of 0.4%. The S&P 500 (+1.1%) regained its 50-day moving average with all ten sectors contributing to the climb. Contrary to the expectations of many, Janet Yellen's testimony before the House Financial Services Committee was uneventful as the Chair struck a tone consistent with remarks made by her predecessor. When asked about the impact of the disappointing jobs reports for December and January on the Fed's reaction function, Ms. Yellen said it would be premature to alter policy based on a limited sample size. All ten sectors took part in the advance with energy (+1.4%) and materials (+1.2%) ending in the lead. Despite the broad rally, trading volume was below average as less than 700 million shares changed hands at the NYSE.

Equity indices took a bit of a breather on Wednesday after the S&P 500 surged nearly 4.5% in the six sessions since February 3. The benchmark index shed less than a point while the Dow Jones Industrial Average slipped 0.2%. Overall, the session was very quiet as the key averages respected narrow ranges. The S&P 500 spent the bulk of the trading day near its flat line while the Nasdaq (+0.2%) outperformed. Again, participation was well below average with less than 630 million shares changing hands at the NYSE.

Thursday's session saw the stock market rally steadily throughout the trading day despite starting on a lower note. Small caps led the way with the Russell 2000 climbing 1.3% while the S&P 500 advanced 0.6%. The benchmark index was down as much as 0.6% at the start after overnight weakness in the futures market set the stage for a lower open. The losses in futures coincided with a wave of yen strength that once again stoked fears about potential forced unwinds of the yen-based carry trade. Adding to the early weakness was a disappointing retail sales report for January. Even though stocks opened lower, the S&P 500 found support at its 50-day moving average in the 1810 area. The index also drew strength from the retreat in the yen as the dollar/yen pair climbed off its low just under the 101.75 level.