Markets: The market bounced back this week, with all 4 indexes making big gains, and recapturing half of the gains from the pullback earlier in the month. It was the market’s best week in over 5 years. Gains were propelled by investors temporarily blowing off rising rate concerns, increasing Crude Oil prices, and strong earnings – of the 400 S&P 500 companies who have reported results, 75% have exceeded analysts’ profit forecasts, and 78% beat sales estimates.
Dividend Stocks Update: These high dividend stocks go ex-dividend this coming week: APO, NAT, MAIN, SUNS.
Volatility: The VIX fell 33% this week, ending at $19.46, reversing its huge gains of the previous week.
Currency: The USD fell vs. most major currencies this week.
Market Breadth: In a very strong week for market breadth, 28 of the Dow 30 stocks rose this week, vs.none last week. 91% of the S&P 500 rose, vs. 7% last week.
Economic News: Mortgage rates rose to the highest level in 4 years.”Industrial production slipped 0.1% in January, the first decline after four straight gains, the Federal Reserve reported Thursday. The drop in output was below Wall Street expectations of a 0.3% increase. Adding to the sense of softness, December's initial report of a large 0.9% increase was cut in half to a 0.4% rise.
Manufacturing output was unchanged in January for the second straight month. Mining output fell 1%. Utility output rose 0.6% after a sharp 4.6% gain in the prior month. Auto production rose 0.6% in January, down from a 1.1% gain in the prior month.
Capacity utilization edged down to 77.5% in January from 77.7 in the prior month. The capacity utilization rate reflects the limits to operating the nation's factories, mines and utilities. It's still well below pre-recession levels, above 80%, that could fan production costs and prices.” (Source: MarketWatch)
“Construction on new homes in the U.S., known as housing starts, jumped almost 10% in January to an annual rate of 1.33 million. That's the second highest level since the Great Recession and it easily exceeded the 1.24 million forecast of economists polled by MarketWatch. Housing starts bounced back in January after a sharp decline in December tied to poor weather.
Building increased in the North, South and West. And two-thirds of the new units on which construction began were single-family homes, the bread-and-butter of the housing market.
Permits to build new homes also hit a 10 1/2-year high, rising 7.4% to an annual rate of 1.4 million.”
Week Ahead Highlights: Q4 earnings season continues, with DOW components Coke (NYSE:KO), Home Depot (NYSE:HD), Walmart (NYSE:WMT), and Nike (NYSE:NKE) reporting. We’ll also get some clues on the Feds thinking about inflation, from the minutes of the January policy meeting, chaired by Janet Yellen.
Next Week’s US Economic Reports: It’ll be a short week, with markets closed Monday for President’s Day. There are very few economic reports scheduled, but we’ll get a look at Existing Home Sales on Wed.
Sectors: All sectors had positive gains this week, with Tech, Financials, and Industrials leading, while Real Estate lagged.
Futures: WTI Crude futures bounced back, and rose ~4%, while Natural Gas fell .5%. “”Booming U.S. shale production forced the OPEC oil cartel to raise its crude supply forecasts for this year, even as it said strengthening global demand would continue to help eat up the excess supply.
In its closely watched monthly oil market report, the Organization of the Petroleum Exporting Countries said supply from producers outside the cartel should increase by 1.4 million barrels a day this year. Almost all of it comes from the U.S., where growth is expected to be 1.3 million barrels a day. OPEC said Monday it now expects world oil demand to reach 98.6 million barrels a day this year. Thats 60,000 barrels a day higher than last months forecast, representing growth of 1.59 million barrels a day and largely in line with demand growth last year. The cartel raised its demand figure for 2017, stand at 97.01 million barrels a day.”
