Market bulls made a strong stand last week. The optimists of the market sneered at bad news and bought stocks. Negative headlines to start the week gave way to better than expected earnings reports and continued strength in the metals complex. The market has been able to absorb a wide variety of seemingly crushing body blows and continue to move higher. The proverbial wall of worry is out there and the bulls have continued to buy all pullbacks.
Stocks finished the holiday shortened week strongly, largely due to several better than expected earnings reports. Strength in the markets last Wednesday and Thursday gave both the Dow and S&P 500 weekly gains of more than 1%. The NASDAQ was even stronger as it rose 2% last week.
NASDAQ strength was attributed to strong earnings reports from marquee tech names in the semiconductor, storage and cloud computing sectors. Fears over the impact of events in Japan earlier in the year did not materialize. Tech companies largely reported better than expected earnings with many companies also giving strong forecasts for the remainder of the year.
The financial sector offered a muddled picture last week. Insurance and credit card related companies announced strong earnings reports. Banks continued to report lackluster loan growth numbers. Banks have stabilized, but loan growth has not taken hold.
The industrial sector produced some of the week’s best earnings reports. Industrial companies with global reaches reported better than expected earnings growth with strong forward guidance.
Leading Economic Indicators for March were up 0.4% in March. That is down from the 0.8% increase in the prior month, but greater that the 0.2% increase that had been expected.
Weakness in the dollar once again helped select commodities move higher last week. June gold rallied 0.3% Thursday to close at 1504.00 per ounce. Silver was again the big star last week. May silver surged 3.8% Thursday to close at $46.13 per ounce. Silver closed at a 31 year high to close the week.
The downgrade of the outlook for United States debt issued last Monday had a very short term impact on the markets last week. The stunning announcement released prior to the open a week ago brought some stock indexes below support levels in early trading last Monday. Buyers came in to support the market and stabilized things by the close. In early trading the S&P 500 reached a low of 1294 last Monday. The index ended the week over 1337. The S&P moved almost 3.5% off its low of Monday to the close last Thursday.
To say the market has proven resilient this year is an understatement. A series of negative macro events have put the markets under pressure this year. Always remember it is not the news that is important, it is the reaction that counts. The Dow actually broke above intermediate term resistance last week. The levels of resistance for the S&P 500 and NASDAQ are 1345 and 2842. If those levels are taken out, the rally in the market will strengthen. The lows of last week are the support levels to focus on, 1294 for the S&P, 12,090 for the Dow and 2705 for NASDAQ.
