Positive earnings reports and a better-than-expected Consumer Sentiment Index helped stocks finish the week with strength.
Upbeat earnings reports and a better-than-expected preliminary reading of the Thompson Reuters/University of Michigan Consumer Sentiment
Index for February gave investors the enthusiasm they needed to send stocks higher on Friday. Although economists were expecting the Consumer Sentiment Index to decline to 80.0 from January’s 81.2, it remained unchanged. Because the American Economy is 70 percent consumer-driven, reports such as the Consumer Sentiment Index and the Consumer Confidence Index are closely-followed as forward-looking indicators of economic health. The good news helped the stock market achieve its best week of gains during 2014.
The Dow Jones Industrial Average (DIA) picked up 126 points to finish Friday’s trading session at 16,154 for a 0.79 percent advance, bringing the Dow 58 points above its 50-day moving average of 16,096. The S&P 500 (SPY) climbed 0.48 percent to close at 1,838.
The Nasdaq 100 (QQQ) advanced 0.12 percent to finish at 3,663 – reaching its highest level since July of 2000. The Russell 2000 (IWM) also rose 0.12 percent to end the day at 1,149.
In other major markets, oil (USO) advanced 0.11 percent to close at $35.91.
On London’s ICE Futures Europe Exchange, March futures for Brent crude oil advanced 58 cents (0.53 percent) to $109.10/bbl. (BNO).
April gold futures advanced $18.80 (1.45 percent) to $1,318.90 per ounce (GLD).
The transportation sector was in overdrive on Friday, as the Dow Jones Transportation Average climbed 0.34 percent to 7,306, climbing further above its 50-day moving average of 7,275 (IYT).
In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks fell as the yen strengthened to 101.57 per dollar during the last 100 minutes of Friday’s trading session in Tokyo. A stronger yen causes Japanese exports to be less competitively priced in foreign markets (FXY). The Nikkei 225 Stock Average sank 1.53 percent to 14,313 (EWJ).
In China, gains by the pharmaceutical and consumer staples sectors offset losses in the banking sector, which resulted from non-performing loans. China’s loan defaults reached their highest level since the beginning of the global financial crisis. The Shanghai Composite Index had a strong finish to a week which brought an advance of over 3 percent. On Friday, the Shanghai Composite Index surged 0.83 percent to 2,115 (FXI). Hong Kong’s Hang Seng Index advanced 0.60 percent to 22,228 (EWH).
In Europe, the release of fourth-quarter GDP data from Eurostat gave stocks a boost. In the Eurozone, fourth-quarter GDP expanded by 0.3 percent, compared with 0.1 percent during the third quarter. For the greater, 28-nation European Union, fourth-quarter GDP expanded by 0.4 percent, compared with 0.3 percent during the third quarter. France dodged the recession bullet in an exquisite manner. Its fourth-quarter GDP expanded by 0.3 percent, in-line with that of the Eurozone. Beyond that, third quarter GDP for France was upwardly-revised from negative 0.1 percent to zero, overruling the third estimate, released on January 10, which had the nation’s third-quarter GDP contracting by 0.1 percent.
The Euro STOXX 50 Index finished Friday’s session with a 0.68 percent advance to 3,119 – climbing further above its 50-day moving average of 3,050. Its Relative Strength Index is 57.93 (FEZ).
Technical indicators revealed that the S&P 500 climbed further above its 50-day moving average of 1,811, by finishing Friday’s trading session with a 0.48 percent advance to 1,838. Its Relative Strength Index (RSI) rose from 58.06 to 60.18. The MACD has just crossed above the zero line, suggesting that the S&P could continue its advance during the immediate future.
On Friday, all sectors were in positive territory. The financial sector was the laggard, with a 0.14 percent advance.
Consumer Discretionary (XLY): +0.60%
Technology: (XLK): +0.19%
Industrials (XLI): +0.65%
Materials: (XLB): +0.81%
Energy (XLE): +1.31%
Financials: (XLF): +0.14
Utilities (XLU): +0.65%
Health Care: (XLV): +0.36
Consumer Staples (XLP): +0.58%
Bottom line: A batch of positive earnings reports, combined with a better-than-expected Thompson Reuters/University of Michigan Consumer Sentiment Index for February, boosted the stock market through the final session of its best week for 2014.
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