(Photo of Jets truck on the PA Turnpike enroute to Pittsburgh – courtesy of Erika Petrozelli)

I succumbed to the temptation of attending the Steelers-Jets game in Pittsburgh. On Saturday morning, I will be departing from my warm nest in Bethlehem to trek over the river and through the woods to the more frigid side of the state, intending to stay overnight at my brother’s house outside of Indiana (Pa). On Sunday, my wife Jo Anne, my daughter Erika and her husband Matt Petrozelli, and his father and mother will descend upon the three rivers to watch one of the coldest games in NFL history. There are 2 Steelers fans and 4 Jets fans in our mini-group so there will be some happier than others by the time you read this on Monday.

UPDATE:  Steelers fans left happier than Jets fans…

“How people treat you is their karma; how you react is yours.”

-Wayne Dyer

After two months of steady gains, stocks ran out of steam last week.

The Standard & Poor’s 500 index closed at 1,283.35, down on the holiday-shortened week. It was the first weekly decline for the index in eight weeks. On Jan. 19, it fell by more than 1%, something it hadn’t done for 37 trading days, according to Bespoke Investment Group. The index retraced some of its losses as the week wore on.

The Dow Jones Industrial Average managed to eke out its eighth consecutive week of gains, climbing 0.72% to 11,871.84. General Electric (ticker: GE) was a standout among the blue chips, jumping 7% on Friday on strong fourth-quarter earnings report. The conglomerate’s profits surged 51%, helped by improved operating margins. Barry Knapp, head of U.S. equity strategy at Barclays Capital Equity Research, was heartened to see strength in GE’s infrastructure-related sales.

The tech-heavy Nasdaq Composite, for its part, was down 2.4%, to 2,689.54. A big drag on the index was Apple (AAPL), which fell 6% on the week. The technology behemoth released stellar earnings, but that was overshadowed by the announcement earlier in the week that its famed chief, Steve Jobs, is taking a medical leave.

It was also a tough week for smaller stocks, which had enjoyed nice gains until recently. The Russell 2000, which tracks small-capitalization stocks, was down 4.26%, only its second weekly decline since mid-November. And the S&P 400 Midcap Index fell 1.8% on the week. Brian Belski, chief investment strategist at Oppenheimer, predicts there “will be an unwinding of the small-cap trade, especially this year as we see bond yields go up.”

Yields did edge up as Treasuries sold off, in part because of some encouraging news about the economy. For example, new claims for unemployment benefits dropped by 37,000 to around 404,000, seasonally adjusted. The 10-year Treasury was yielding 3.413% at the end of the week, up from 3.334% a week earlier.

FINANCIAL STOCKS HAD A NOTABLY mixed time of it. Morgan Stanley (MS) saw its shares rise about 3.6%, thanks to strong fourth-quarter results. But Goldman Sachs (GS) sold off about 5% on disappointing earnings. Fourth-quarter profits fell by 52%, reflecting weaker trading results. It was also a tough week for Bank of America (BAC); its shares slid about 6% amid continued mortgage write-downs. The banking giant posted a fourth-quarter loss of $1.2 billion.

Belski maintains that this week’s up-and-down performance by the financials illustrates how “financials have taken over for tech as the quintessential stock-pickers sector.” In other words, expect banks to bumpy for a while.

But the market as a whole may still be intact. In general, Knapp says, “There is nothing to dissuade me from an overall optimistic view.” Even bulls sometimes need a breather

(Source: Barrons Online).

Returns through 1-21-2011	1-week	Y-T-D	1-Year	3-Years	5-Years	10-Years
Bonds- BarCap  Aggregate Index	-.3	-.1	4.8	5.3	5.6	5.7
US Stocks-Standard & Poor’s 500	-.8	2.1	17.3	1.2	2.5	1.5
Foreign Stocks- MS EAFE Developed Countries	0.0	1.8	7.1	– 4.4	–  .4	1.3

Source: Morningstar Workstation. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Three, five and ten year returns are annualized. Assumes dividends are not reinvested.

Our readers have benefited from The Weekly Commentary’s insights, predictions, and cautions since July, 2007.  Our goal is to keep you informed.  We obtain information by spending substantial time each week reading and analyzing the Wall Street Journal, The Economist, Barrons, Fortune magazine, Investment News, S&P Market Insights, Reuters news feed, Google Alerts, and a number of financial blogs.  We use our educational background and decades of experience to sort through irrelevant “noise” and then draw our own insightful conclusions.

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“There are two kinds of failures: Those who thought and never did, and those who did and never thought.”

– Laurence Peter

And, now there are two teams left in the AFC:  (1) Pittsburgh Steelers, and (2) New York Jets.  Two of my favorite teams.  What were the odds of that happening, especially when the Steelers were losing 21 – 7 at halftime to the powerful Ravens and the Jets had yet to knock off the Patriots? 

But, I have to go with my number one:  the Steelers.  Go Steelers!  There is a powerful temptation to go to this game in Pittsburgh……. 

The economy continues to give us mixed signals.  Here is a detailed list of these signals:

Positives:
1) Japan joins China in wanting to chip in to help Europe

2) Portugal, Spain and Italy all successfully sell debt and sets calmer tone for the week

3) US Treasury yields shrug off higher inflation readings and stay moderate (bond bulls should thank the Fed)

4) Stocks shrug off all the negatives below and continue to move higher

5) Thailand, South Korea and China take prudent steps to cool inflation pressures

Negatives:
1) PPI, CPI (record high), Import Prices, inflation expectations in Univ of Michigan, all point to upward inflation trend and JOC and CRB food indices hit record highs

2) Thailand, South Korea and China all tighten policy over inflation worries

3) Indian Sensex index falls to 4 month low after 8.4% wholesale inflation report and ahead of likely rate hike on Jan 25th

4) US Retail Sales a touch light

5) Univ of Michigan confidence light

6) Initial Claims jump but seasonal issues cloud the info

7) Muni’s break down.