The broad market soared to all-time highs last week, surfing 2% higher on a wave of reassuring—if short term—developments. Small-caps made a comeback, outperforming megacaps, which some take as supportive of a more sustained resurgence after the year’s so-far desultory move.

“A confluence of factors both geopolitical and fundamental helped global markets rise, not just the U.S.,” says Joseph Amato, chief investment officer at Neuberger Berman. With a Ukrainian cease-fire agreed to on Thursday, and Greece and its creditors seen to be talking rather than bickering, “at least for now, it seems to have calmed fears,” Amato says. Whether the actions last week presage long-term solutions remain to be seen.Investors were also heartened by rising oil prices, more promising German economic data, and a “reasonable” showing from fourth-quarter earnings reports, he adds.

Crude prices rose for the third consecutive week. While there is an oversupply of the black gold, the sustained oil increase is easing fears about oil demand and global growth.

Though euro-zone economic data on Friday showed some big countries are still stagnating, Germany—the Continent’s engine—posted 0.7% fourth-quarter gross-domestic-product growth, significantly better than the previous quarter.

Last week, the Dow Jones Industrial Average picked up 195 points, or 1.1%, to 18,019.35, while the Standard & Poor’s 500 index jumped 42 to 2096.99, a record close. The Nasdaq Composite tacked on 149, or 3.2%, to 4893.84, and the Russell 2000 small-caps index gained 1.5% to 1223.13.

After underperforming for a year, small-cap stocks played catch-up last week, says Rick Fier, a trader at Conifer Securities. Given that the group didn’t outperform as the greenback strengthened, contrary to expectation, the latest rise is seen as confirming the bull, he says. Fier expects the S&P to surpass 2100 soon and then grind higher.

(Source: Barrons Online)