The stock market edged up last week, with the Dow Jones Industrial Average eking out a record high. Thanks to the continuing plunge in crude oil prices, which intensified Friday, shares of groups aided by declining fuel costs—airlines, hotels, and retail, among others — soared in a light-trading, holiday-shortened week.

On Friday alone, consumer discretionary stocks rose 1.2% while the energy index sank 6%, reflecting a wholesale exit from the sector. That weakness worsened late Friday and prevented the broad market from closing the week at an all-time high.

The outsize moves came in the aftermath of OPEC’s decision not to cut oil output, on Thursday when financial markets were closed in the U.S. for Thanksgiving Day. That sent West Texas Intermediate crude to $66.15 per barrel, down 13.5% on the week and the lowest in over five years.

Last week, the Dow Jones Industrial Average added 18 points, or 0.1%, to 17,828.24, a record close. The Standard & Poor’s 500 index rose 4 to 2067.56, off slightly from the high set Wednesday. The Nasdaq Composite index rose 79, or 1.7%, to 4791.63.

Friday’s low trading activity could have accentuated market moves and might not be a good lens on the coming week. As Paul Nolte, a money manager at Kingsview Asset Management, notes, “There were all of six people trading Friday after the holiday.”

The oil price slide is a net positive for the consumer and U.S. stocks, but it will probably weigh on S&P 500 index fourth-quarter earnings reports through weakness in energy company profits, notes Michael Mullaney, chief investment officer at Fiduciary Trust in Boston. Overseas economies, particularly emerging markets that export oil, might get hurt, too, he adds.

Emerging market stocks plunged 2% Friday, a signal of investor worry about global growth. Jack Ablin, CIO of BMO Private Bank, observes that slowing demand is “a growing part of the reason” for the oil price drop, in addition to the world’s oversupply of black gold.

The U.S. economic news last week was generally mixed but didn’t dent the idea that the U.S. economy is improving. Third-quarter U.S. gross domestic product was revised to 3.9% at an annual rate from 3.5%, well above the 3.3% consensus.

Energy prices will probably be weak at least into the first half of 2015, and the big drop so far is probably curtailing the U.S. shale revolution already. U.S. oil-field production was down 500,000 barrels per day to 9.4 million from Sept. 12 to Nov. 14, according to Yardeni Research.

The S&P 500 index, up 12% this year, has not yet recorded a drop of four consecutive days, according to Bespoke Investment Group, the longest such streak in any calendar year. The previous longest was in 1997, when trading went until Aug. 26 before hitting a string of four down days.

(Source: Barrons Online)

With another strong close last week, the U.S. stock market has produced a melt-up, soaring 13% from its Oct. 15 lows in little more than a month. Both major indexes finished at all-time highs Friday. There is a palpable sense among market participants that equities will likely rally through to year end, historically a bullish period for stocks.

Beaten-down sectors such as materials and energy led the way. Trading activity was lackluster. The rally’s proximate causes were monetary-easing developments in China and Europe on Friday. Yet there appears to be a growing appreciation for what the big decline in oil prices might mean for the U.S. economy.

Should that drop in energy prices be sustained, says Jason Weisberg, a partner at Seaport Securities, it will have “collateral benefits” across many sectors. It’s good for corporate margins—excluding energy firms—and is an effective tax cut for consumers, he says. “A significant cost in people’s lives has gone down and they will be able to spend on things they have put off,” adds Weisberg, who’s betting on a good fourth quarter of consumer spending.

The Chinese central bank surprised investors Friday by reducing one-year benchmark lending rates—the first drop in more than two years—in an attempt to stimulate faster growth. The same day European Central Bank president Mario Draghi said the ECB was prepared to do more to expand asset purchases, which inject liquidity into eurozone economies. The ECB said it started buying asset-backed securities to encourage banks to make loans and spur economic growth.

Last week the Dow Jones Industrial Average jumped 175 points or 1% to 17,810.06 and the S&P 500 index rose 24 2,063.50. Both were new highs. The Nasdaq Composite index rose 24 or 0.5% to 4712.97. The Russell 2000 index finished at 1172.42, little changed. The small-cap index has outperformed the big caps since mid-October’s lows.

It was another central-bank-fueled run, says Keith Bliss, director of sales at broker-dealer Cuttone. “Any time you’ve got one of the top five central banks signaling easing, the trade is simple, up.” It’s clear to investors, too, that the big central banks, including the Federal Reserve, will remain accommodative.

There’s been a change in investment direction, adds Michael Marrale, head of research, sales, and trading at Investment Technology Group. “A lot of cash left the market in the massive de-risking” by both institutional and individual investors in the October decline, he says. Some, but not all, has come back, and the focus now is U.S. small caps instead of European and emerging-market names, Marrale says.

(Source: Barrons Online)

Stocks finished the week modestly higher in quiet trading, a notable contrast to the fireworks of previous weeks. Led by telecom, consumer discretionary, and technology stocks, the Standard & Poor’s 500 index eked out a small rise Friday, but one big enough to reach a new record close.

With the third-quarter earnings season effectively over, investors focused on the continuing plunge in oil prices. Crude fell 4% to $75.82 per barrel last week. Already beaten-down energy stocks slipped 2%. They’re down 14% since midyear.

That’s made investors look at falling crude cautiously and as a risk to stocks, says Quincy Krosby, a Prudential Financial markets strategist. After positive retail numbers came out Friday, the market is starting to view collapsing energy prices as a net positive, she adds. U.S. October retail sales rose 0.3% from September, the Commerce Department said, higher than expectations of 0.2%. This suggests that lower gasoline prices are fattening consumers’ wallets, adds Giri Cherukuri, head trader at Oakbrook Investments.

“Lower pump prices mean consumers have money to spend on other stuff,” he says. A boost came from Wal-Mart Stores ’ (ticker: WMT) better-than-expected third-quarter report Thursday. Domestic comparable sales rose 0.5%.

The Dow Jones Industrial Average rose 61 points or 0.35% to 17,634.74 on the week, and the S&P 500 gained 8 to 2,039.82. The Dow finished off a high reached Thursday. The Nasdaq Composite index rose 56 or 1.2% to 4688.54.

Another bit of positive news Friday was that euro-zone gross domestic product grew 0.2% in the third quarter, more than feared.

(Source: Barrons Online)

The stock market motored ahead last week by about 1%, again finishing at all-time highs. Investors were cheered by the Republican midterm electoral win, continued strong corporate quarterly profits, and speculation that the European Central Bank would amplify its monetary stimulus.

While one beaten-up group, small-caps, didn’t do as well, other industry sectors that had taken a pounding lately, like energy and commodity-related stocks, rebounded sharply.

On Thursday, European Central Bank President Mario Draghi said the ECB would do what’s necessary to kick-start the faltering euro zone, implying up to a 1 trillion euro ($1.25 trillion) increase in the bank’s balance sheet through simulative bond-buying. Despite having heard that before, investors took it to heart.

Last week, the Dow rose 183 points or 1% to 17,573.93, and the Standard & Poor’s 500 index gained 14 to 2,031.92. Both were new closing highs. The Nasdaq Composite index ended little changed at 4632.53, as did the Russell 2000 small cap index, at 1173.32.

Last Wednesday, all three Dow Jones major averages, the industrials, transports and utilities, closed at a record. Like perfect games in baseball, that doesn’t happen often; the last time was on April 25, 2007. When you throw in the S&P 500, which also made a new high that day, you would have to go back to March 1998 to find the last time all four ended at all-time highs on the same day.

(Source: Barrons Online)

Who’s afraid of October? Stocks finished the week and what is typically a poor market month at record highs after a wild ride that saw prices fall sharply at mid-month before surging higher. The major indexes delivered Halloween treats, as the Dow soared 3.5% last week in active trading.

The fireworks began Wednesday with a brighter view of the U.S. economy and jobs picture from the Federal Reserve, and accelerated Friday on a surprise announcement from the Bank of Japan that it would increase its asset purchases to boost its economy.

Additionally, markets welcomed news Thursday that the U.S. third quarter gross domestic product rose at a higher-than-expected 3.5% annual rate. That assuaged investor fears after the Fed also said Wednesday that, as long anticipated, it ended its monthly quantitative-easing program. Continued strong third-quarter earnings from Corporate America also bolstered investor enthusiasm.

Both the Dow Jones Industrial Average, up 585 points or 3.5% to 17,390.52 last week, and the Standard & Poor’s 500 index, which gained 54 to 2018.05, finished at all-time highs. The Dow rose 2% in October, the S&P 500 2.3%. The Nasdaq Composite index added 147 or 3.3% last week to 4630.72.

“The Fed’s upbeat view of the economy says the long-term U.S. expansion is on track and calmed any fears about the end of QE,” says one market strategist. The Bank of Japan’s surprise move will boost slow global growth, he adds.

That slow growth led to the earlier big drop, says Dan Greenhaus, BTIG’s chief global strategist. It’s been a powerful snapback, helped by good earnings, which are countering fears about plunging oil prices, weak global growth, and a strong dollar. Thomas Lee, co-founder of Fundstrat Global Advisors, says that institutional investors remain cautious despite the market recovery. That augurs well, he adds, for the near-term as markets head into November, the beginning of the historically auspicious November-to-April season for stocks.

Conspiracy theorists might wonder about the Fed’s timing in ending QE, which was followed within 48 hours by BOJ’s bond-buying. Consider the baton passed.

In case anyone forgot, there’s a national election in the U.S. Tuesday, but investors don’t seem to care much about it.

(Source: Barrons Online)

Stocks bounced back last week in a powerful upswing that saw the Standard & Poor’s 500 index soar 4.1%. The rise erased the deep losses of the previous week and then some. Equity markets around the world joined in the rally, up about 2%.

“Investors were buoyed by a combination of sentiment improving on better global economic figures and solid U.S. third-quarter earnings results,” says Yousef Abbasi, a market strategist at JonesTrading.

In particular, the market was bolstered by profit reports from some of the biggest industrial names, continued good U.S. macroeconomic numbers, and better-than-expected—if still unimpressive—euro-zone and Chinese data.

The strong earnings news—from the likes of Caterpillar (ticker: CAT), 3M (MMM), Microsoft (MSFT), and General Motors (GM)—came later in the week and seemed to expunge the memory of the poor showings. The latter, for example, came from equally large mega-cap companies such as International Business Machines (IBM), Amazon (AMZN), AT&T (T), McDonald’s (MCD), and Coca-Cola (KO).

The Dow Jones Industrial Average, which is filled with many of the above-named stocks, didn’t do as well as the S&P. It rose 425 points or 2.6% to 16,805.41. The S&P 500 index gained 78 to 1964.58. The Nasdaq Composite index added 225, or 5.3% to 4483.72, while the Russell 2000 picked up 3.4% to 1118.82.

(Source: Barrons Online)

Stock prices were whipsawed in a wild week of trading, ultimately falling over 3% on worsening worries about slowing global economic growth. By Friday’s close, the market was down 5% from highs, halfway to a correction.

As bad as that was, many industries particularly exposed to such fears received an even bigger beat-down. As crude-oil prices fell into bear-market territory on Wednesday, down over 20% from highs, oil and gas shares shed 8% last week. Semiconductors lost 9%, most of that after bellwether Microchip Technology (ticker: MCHP) lowered quarterly sales guidance, led by a revenue miss in China. Auto makers fell 8%, as Ford Motor (F) said that September sales in China declined 4%. Airline stocks were whacked 10% on growing Ebola fears, and agricultural-products firms lost 9% on continuing drops in commodity prices.

That news fed the global growth anxiety, says Stephen Massocca, a portfolio manager at Wedbush Equity Management. “I felt like I went 13 rounds with Mike Tyson every day last week.”

Perhaps that’s an exaggeration, but in recent weeks plenty of money managers have complained of the pain to this columnist. Just one in five active fund managers is outperforming year to date, according to an Oct. 9 report from Bank of America Merrill Lynch.

The simplest measure of volatility was that Wednesday was the best day of the year for the Dow Jones Industrial Average, up 275 points, and was promptly followed by the worst day, down 335 on Thursday. The last time the index had a back-to-back largest point gain and drop of the year was in 1997—in October, of course.

Last week, the Dow surrendered 466 points or 2.7%, to 16,554.10, and the Standard & Poor’s 500 index lost 62 or 3.1%, to 1906.13. The Nasdaq Composite index lost nearly 200 or 4.5%, to 4276.24. The Russell 2000 fell 4.7%, to 1053.32.

How bad the volatility seems depends on your time frame, says Thomas Villalta, director of investment research at Covenant Multifamily Offices. “It’s more than people have been used to lately” but still low compared to gyrations in 2011. “There’s no sense of panic,” he says.

Friday’s decline didn’t show the “buy on dips” mentality that has supported the market previously, adds Tim Ghriskey, chief investment officer of Solaris Asset Management. As third-quarter earnings begin to come out, investor focus should move to profits from global issues, he says.

Friday’s late-day weakness doesn’t bode well for the market this week.

(Source: Barrons Online)

It was a bad week—but it could have been worse. Stocks ended down less than 1% from the previous Friday’s close, but at one point on Thursday the major indexes were down 3% to 4% from all-time highs. The Russell 2000 small cap index entered correction territory—traditionally defined as 10% or more down from highs—but then recovered some.

A confluence of soft global economic data, some in the U.S.; protests in Hong Kong; and the first confirmed American case of Ebola made investors uneasy with a bull market that is now one of the longest in duration, at 4½ years.

Stocks were at weekly lows just prior to noon Thursday, when investors came storming back into equities, almost as if a switch had been flipped. No single cause seems identifiable, but, given how short-lived and narrow past drops have been in this long bull run, the buy-on-the-dips reflex appears to have been triggered. Volatility isn’t likely to ease, however, until after the U.S. midterm elections next month.

Last week, the Dow Jones Industrial Average fell 103 points, or 0.6%, to 17,009.69, and the Standard & Poor’s 500 index lost 15, or 0.75%, to 1967.90. The Nasdaq Composite index gave up 37, or 0.8%, to 4475.62. The Russell 2000 fell 1.3% to 1104.74.

With the market not far from all-time highs achieved just two weeks ago, the generally bad spate of global news got on investors’ nerves, says Ralph Fogel, head of investment strategy at Fogel Neale. “People started to say ‘We have to take some money off the table here,’ ” he adds.

U.S. economic data released at the start of the week were soft, but Friday the Labor Department said the U.S. added 248,000 new jobs in September, and the unemployment rate dropped to 5.9% from 6.1% in August, better than expected.

Domestic economic numbers are good, “but never seem to be as steady as you’d like,” says John Wilson, founder and publisher of ReveilleLetter.com. A generally bullish Wilson expects more volatility in the run-up to U.S. elections next month, and, he adds, “Ebola is clearly a worry.”

The sloppy economic data, Hong Kong unrest, and European economic weakness remain a concern for the near term, adds Jim Russell, senior equity strategist at U.S. Bank Wealth Management. However, with bond prices stretched and commodities down, U.S. stocks still look like the best asset class, he says. Somehow, that “buy-on-weakness” mentality was sparked Thursday, he adds.

Investors are tiring of waiting for the correction. “I’d like to see a good demoralizing selloff that stretches the market’s technical indicators, brings out some investor capitulation and gives bears renewed hope,” says Wilson.

The third-quarter earnings season will kick off this week, and analysts anticipate companies in the S&P 500 index to post earnings per share growth of 4.6%, with revenue growth of 3.6%, according to FactSet Research.

There haven’t been four consecutive down days for the S&P 500 in 2014, according to Mike O’Rourke, chief market strategist at Jones Trading. Last year, when the index rose 30%, there were four such stretches. That’s a testament to the strength of this bull.

(Source: Barrons Online)

Stocks closed out a rough week with a buoyant Friday, but the mini-rally wasn’t enough to make up for poor performances earlier. All the major indexes fell 1% or more. Like the previous week, large-cap stocks outperformed small caps, but this time they just fell less instead of rising.

While market observers blame the retreat on numerous factors, from mixed U.S. economic data out this week to continued concerns about Russian moves to drag Ukraine back into its sphere of influence, mostly there’s a vague unease over the state of global economic growth.

U.S. economic expansion is proceeding apace, but the rest of the developed nations are limping along. That translated into the risk-off trade, which culminated in a big downdraft and heavy volume Thursday. Otherwise trading was quiet during the Rosh Hashanah religious holidays.

Last week, the Dow Jones Industrial Average lost 167 points, or 1%, to 17,113.15, while the Standard & Poor’s 500 index gave up 28 points to 1982.85. The Nasdaq Composite index ended at 4512.19, down 1.5% or 68.

On Friday, the Commerce Department raised its previous estimate of second quarter U.S. gross domestic product growth to a 4.6% annual rate, about as expected, from the previous 4.2%. Earlier in the week, however, Germany’s IFO survey showed Teutonic business confidence in September dropped to its worst level in more than a year.

If there was one reason for the market drop, says Bill Stone, chief investment strategist at PNC Wealth Management, “It’s worries about global growth.” Investors are concerned about how much more economic pain is to come in Europe and Japan, he adds. This week’s meeting of the European Central Bank governing council Thursday could be key for stocks short term, Stone says, because many are expecting details in the ECB press conference to follow. The bank has previously promised a version of quantitative easing that includes buying covered bonds and asset-back securities. Investors want to know how much, Stone adds.

At the end of October, investors will again turn their attention to the Federal Open Market Committee meeting, says Robert Pavlik, chief market strategist at Banyan Partners. While there’s no press conference scheduled afterward on Oct. 29, investors are aware that “the next Fed move, whenever it comes, can’t be tapering. It will be raising rates.” Volatility could be introduced on rising speculation about that infamous rate hike expected in mid-2015.

Despite the losses, the market remains near all-time highs, and some bullish exhaustion shouldn’t be a surprise. Bernie McGinn, president of McGinn Investment Management, says he’s been “more aggressive” on the sell side in recent weeks, “even though I don’t feel any more negative than before. It’s just that I don’t see a whole lot of stocks that say ‘Buy Me! Buy Me!’ ” A 10% correction “would be welcome,” he adds, and allow him to start nibbling at the stocks on his buy list.

(Source: Barrons Online)

The sun will come out in November. That’s the hope. Until then, the Wall Street weather report is for seasonal clouds and rain, as investor concerns over rising interest rates intensify.

Last week, stocks fell about 1% after five consecutive weekly rises, the skid greased by Friday’s release of strong August retail sales. And preliminary September consumer-sentiment numbers were the highest in a year.

Good news is bad news because investors believe that a strengthening U.S. economy will force the Federal Reserve to raise rates more quickly than foreseen. While there are plenty of domestic and overseas political developments that could command headlines, expect rates to dominate.

Last week, the Dow Jones Industrial Average fell 150 points or 0.9%, to 16,987.51, and the Standard & Poor’s 500 index lost 22 points to 1985.54. The Nasdaq Composite gave up 15, or 0.3%, to 4567.6.

“It’s a tug of war out there,” says Douglas Coté, chief market strategist at Voya Investment Management, between joy over U.S. economic growth and fear of rising rates. As the Fed winds up its quantitative-easing program, probably next month, he says, “the transition will be key in the immediate term, and markets will be volatile.”

The Commerce Department said Friday that August U.S. retail sales rose 0.6% over July, with positive revisions in previous months. The better-than-expected sales rise, among other positive data, has the market worried that rates will be hiked faster than anticipated, says Michael Arone, chief investment strategist at State Street Global Advisors. The market expects a first hike of the federal-funds rate in mid-2015.

Not surprisingly, these fears hurt bond prices and pushed up 10-year Treasury yields last week to over 2.6% from 2.35% just a few weeks ago, points out Cameron Hinds, chief investment officer for the Great Lakes region at Wells Fargo. (Bond prices fall when yields rise.) The question remains, “When will the Fed raise rates?” he says, “because the current run rate of U.S. economic growth justifies higher rates.” It could be earlier than the market thinks, Hinds adds. Voya’s Coté sees a March hike.

The market seems certain to focus on the Fed’s news conference on Wednesday, which follows the open-market committee meeting.

Yet, there remain other worries for investors, Arone notes, such as violence in the Middle East and Ukraine, the U.S. midterm elections, the anticipated additional easing moves of the European Central Bank, and even Scottish independence. Still, all three pundits believe that stocks will eventually follow the U.S economy higher.

And on Thursday, Alibaba Group (ticker: BABA) should price its initial public offering. Demand seems high, and the IPO price could exceed the range of $60 to $66 and generate over $20 billion.

That same day, we should find out if Scotland will remain part of the United Kingdom. Aye, laddie.

(Source: Barrons Online)