YAHOO [BRIEFING.COM]: A big mid-week bounce helped the S&P 500 score a weekly gain of 3.7%, helping it reverse the 3.0%
that it lost during the course of trade last week.
Action this week began with the broad market slashing losses for a
flat finish on Monday. Early weakness in response to a disappointing
non-manufacturing PMI reading from
On Tuesday market participants were dealt a mixed batch of Services
PMI readings from
A teleconference between G-7 finance ministers regarding the
persistently precarious conditions facing the eurozone
and
On Wednesday the stock market scored its best single-session
percentage gain of 2012 by spiking in excess of 2%. The rally came in response
to speculation that the Fed is weighing further stimulus options because of
headwinds slowing the economic recovery. No official Fed statement was made,
but European Central Bank President Draghi insisted
that, if needed, actions would be taken after the ECB left its benchmark
interest rate at 1.00%.
The Fed's latest Beige Book suggested that overall economic
activity in the dozen Fed districts continued to increase at a modest to
moderate pace in March and early April, while consumer spending was unchanged
to up moderately.
The stock market’s strong, broad-based gains on Wednesday drove
many traders out of Treasuries, such that the yield on the 10-year Note ran up
to 1.65%, which is roughly 20 basis points above the
record low set last week.
Stocks attempted to follow their impressive performance by climbing
another 1% or so on Thursday, but all of that gain was given up by the
session’s end. Initial buying was helped along by news that China's central
bank trimmed its benchmark interest rate.
Many also held to the belief that efforts will be made to improve
banking and financial conditions in Spain, which had its debt rating downgraded
to BBB from A by analysts at Fitch after the country had held a successful debt
auction earlier in the day.
The notion that the Fed will take steps further stimulate the
domestic economy weren’t exactly given credence by Fed Chairman Bernanke, who
failed to hint at any immediate plans during his speech before Congress.
The only dose of data for the day was an in-line weekly initial
jobless claims count of 377,000. Continuing claims climbed to about 3.29
million from roughly 3.26 million.
On Friday stocks fought to reclaim the gains surrendered in the
prior session. The broad market not only overcame an early loss, but managed to
book a strong gain.
Financials proved to be a source of strength. The sector ascended
from an early loss to a 1.2% gain with help from bank stocks, which
collectively climbed 1.6%, based on the KBW Bank Index. Tech contributed to the
effort by trading up to a 0.9% gain. For the week Financials advanced almost
5%, while Tech advanced little more than 4%.
Telecom scored the strongest gain after some mixed performances
earlier in the week. The sector’s 1.5% gain contributed to a weekly advance of
nearly 3%, which is less than what the broad market achieved.
Of the major sectors, only Energy failed to find positive
territory. For the week it was up almost 4%, but on Friday it finished flat
amid lower oil prices. Oil prices were down more than 2% in early pit trade,
but managed to improve their position by the close. The energy component ended
the day at $84.09 per barrel for a 0.8% loss. Earlier this week oil prices set
a new 2012 low beneath $82 per barrel.
Shares of McDonald’s (MCD
87.75, -0.63) also sat out of the stock market’s advance. The stock was
pressured because of disappointment surrounding the company’s
less-than-impressive 3.3% increase in global sales during May.
Data had hardly any sway, if any at all, with market participants.
Releases featured a slightly narrower trade deficit of about $50 billion, along
with an in-line 0.6% increase in wholesale inventories.
The euro endured selling for the entire session, but was able to
halve an early loss so that it ended the day about 0.5% lower at $1.25. In
contrast to recent weeks, action among stocks was less correlated to the euro’s
movements this week.
Natural gas stayed in positive territory for all of pit trade,
touching a session high of $2.32 per MMBtu. It
settled just below that level at $2.30 per MMBtu for
a gain of 1.3%, but still 0.9% lower than where it began the week. The weekly
decline is largely owed to steep losses suffered in response to a
larger-than-expected inventory build of 62 bcf on
Thursday.
Crude oil spent its entire floor trade in the red. It set a session
low of $82.59 per barrel in morning action before it traded up to a session
high of $84.26 per barrel. It settled the session at $84.09 per barrel for a
0.8% loss. Crude closed the week 1.1% higher than where it began, despite a
lack of commitment by Federal Reserve Chairman Bernanke to immediate plans for
further economic stimulus.
Precious metals traded up after starting pit trade markedly lower.
Gold came off its session low of $1576.20 per ounce and broke into the black as
it headed into the close. Although it managed to erase its loss, gold settled
the week 1.8% lower at $1591.70 per ounce. Silver wasn't quite able to find
positive territory. It settled at $28.48 per ounce, just below its session high
of $28.52 per ounce, or 0.1% lower than last Friday’s
close.
Reports suggest that Europe’s leaders will convene this weekend to
address