Stocks rose smartly last week, by more than 1.5% in a broad rally, despite soft gross domestic product news that caused shares to drop on Friday. First-quarter earnings reports came in, for the most part, as projected. The Commerce Department said that real GDP had risen at a 2.5% annual clip in the first quarter. That was up from 0.4% in the fourth quarter, but weaker than the 3% consensus estimate. The Dow Jones Industrial Average closed at 14,712.55, up 1.1%, or 165 points, on the week, while the S&P 500 added 27 With May nearly upon us, John Leo Manley, the chief equity strategist for Wells Fargo Funds, is already thinking of the summer and likens the market to a beach ball under water. “When you push it down, it just bobs up.” What’s behind that bob? Monetary easing by central banks around the world in general and the Federal Reserve’s quantitative bond buying in particular, he says. Investors must realize two things, Manley avers: ”First, the Fed isn’t going to stop soon, and secondly, no one is going to In a scenario in which the Fed keeps the pedal to the metal, Manley favors large-cap stocks over small-caps. More specifically, he adds that although he still likes the health-care sector, “it’s beginning to look a little long in the tooth now” after a 19% rally this year. “I’d start to focus on large tech stocks more. They look cheap.” This week, investors have a plethora of news to look forward to, including a Fed meeting topped off by April nonfarm payroll numbers. Given the surprise of the unsatisfying March payroll figures one month ago, notes Douglas Cote, chief market strategist at ING Investment Management, the market will look to see if that disappointing data was a one-time event. Speaking of summer, the market is approaching its traditionally weak season. According to Robin Carpenter, who heads up research firm Carpenter Analytix, from 1972 through 2012, the S&P had an average price gain of 6.8% in the seven months After the rip-roaring 11% start to 2013, that shouldn’t stop investors from enjoying the summer, should it? (Source: Barrons Online).
points to end at 1582.24. Friday, the S&P fell 0.2%. The Nasdaq Composite index picked up 73 points and rose 2.3% last week, to 3,279.26.
be able to say soon that the Fed’s easing won’t work.” So the market goes up just when bears are able to push it down, as happened the previous week.
from October through April. In the other five months, the S&P had a cumulative loss of 1.62%.
The Weekly Commentary
Observations of the current state of the stock and bond markets
