Stocks finished generally higher last week, and on an up note Friday. Nevertheless, a big drop in Apple’s (AAPL) share price and some other highflying stocks damped market sentiment.
In particular, investors last week were worried about the first round of elections in France, scheduled April 22, where Socialist party presidential front-runner François Hollande could score important gains. Some momentum investors in particular wanted to get out of way of any losses that might come next week on electoral results unfriendly to capital markets.
On the domestic front, the first-quarter earnings results seen so far are as expected, for the most part. Second-quarter U.S. economic data continue to be less positive than that seen in the first quarter.
The Dow Jones Industrial Average rose 1.4%, or 180 points, to 13,029.26, for the first weekly gain in three weeks. Bucking the trend, and hurt by Apple’s 5.3% drop, the tech-heavy Nasdaq Composite drooped 0.36% to 300.
Other stocks that fell last week after huge run-ups included Priceline.com (PCLN), down 3.4%, and Chipotle Mexican Grill (CMG), falling 5% even though it posted strong first-quarter results last week. These are names being “rented” by momentum funds, but they are getting skittish ahead of the elections and earnings results, traders say.
“The French elections will be closely watched,” says Timothy Ghriskey, chief investment officer at Solaris Asset Management, “and a big influence was Apple,” which is reporting first-quarter earnings Tuesday.
Apple has shown two weeks of relative underperformance, which is unusual for this stock.
The big event for markets over the next four weeks or so will be the giant Facebook initial public offering, which will probably come about mid-May, he Ghriskey says. It’s likely to be a huge IPO where the value and demand will be closely watched by market participants. The Facebook road-show is likely to get under way soon, and if the IPO goes well, it could give a lift to the market as a whole, he says (Source: Barrons Online).