Equities went up a little, then down a little last week, and by Friday ended up a touch higher than where they had started. Large-cap stocks underperformed, pressured by the rising U.S. dollar. Trading was uninspired, and investors remained on the sidelines.

The major stock indexes rose slightly, snapping a two-week losing streak. The euro hit $1.09, a seven-month low, after the European Central Bank left its accommodative monetary stance unchanged Thursday and didn’t rule out more stimulus in December.

The third-quarter earnings season ground on, but provided little impetus, except for Morgan Stanley, where strong earnings boosted financials, up 1.2% last week. The greenback’s strength hurt mega-caps, such as those in the Dow Jones Industrial Average, which tend to get a significant portion of revenue overseas.

The Dow closed at 18,145.71, up seven points, while the Standard & Poor’s 500 index rose eight to 2141.16. The Nasdaq Composite added almost 1%, to 5257.40.

The market seems tired, says Keith Moore, a strategist at FBN Securities, who adds that investors are sitting on their hands, marking time ahead of the U.S. elections. Adam Sarhan, CEO of Sarhan Capital, says that the sideways action also is a consequence of investors waiting for clarity on other issues, such as the vigor of the quarter’s earnings and the Fed’s expected rate hike in December.

The result is “chop city,” as many are hesitant to commit new capital to an aging bull market, yet “every time the market falls, buyers step in,” Sarhan says. “There’s cash on the sidelines that could come in and send stocks higher,” he observes, but the market lacks a bullish catalyst.

The Fed’s likely rate increase, coupled with the ECB’s continued monetary easing, suggests Continental stocks are relative bargains compared with American equities.

(Source: Barrons Online)