It was a good week to be out of U.S. stocks as broad market indexes here gave up ground. That was in marked contrast to major markets around the world, which posted solid rises. After American stocks smoked foreign equities last year, this was a rare week of role reversal.

In sympathy with overseas equities, the largest U.S. companies—which tend to get a good chunk of their sales from international sources—did better. Small-company stocks, typically more domestically focused, fell sharply. Among them, technology and biotech did especially poorly.

Don’t mistake this for the return of the “risk off” trade, since even the MSCI Emerging Markets index—a beaten-down but riskier set of stocks—rose more than 3% last week. World equities, not including the U.S., were up 1.8%; German stocks rose nearly 3%, Japan was up 1.5%.

On these shores, the Standard & Poor’s 500 index dropped nine points to 1857.62. The Nasdaq Composite index lost 121 points, or 2.8%, to 4155.76. The Russell 2000 small-company index dropped 42 points, or 3.5%, to 1151.81. Only the Dow Jones Industrial Average gained, up 0.1%, 20 points, to 16,323.06.

With the quarter about to end, the S&P 500 is essentially flat, a far cry from the 10% rise in the same year-ago period. The bond market continues to confound. Though many have expected interest rates to rise since the Fed announced the tapering in mid-December, bond prices are higher and rates lower. The long end of the Treasury yield curve has flattened a little bit, suggesting bond investors don’t see much in the way of U.S. economic growth. Maybe that’s why some have put their money to work overseas.  (Barrons Online).

One bad day of Fed-induced fretting about interest rates didn’t spoil the whole week, and by Friday the broad market had closed up 1.4%. Fading from view—at least for now—is the ratcheting up of sanctions and rancor between the West and Russia over the illegal absorption of Crimea.

Comments from the Federal Open Market Committee (FOMC) and chair Janet Yellen on Wednesday suggested the Federal Reserve might raise its funds rate earlier than expected and shook up both stocks and bonds temporarily.

Despite that, on the week the Dow Jones Industrial Average still rose 237 points or 1.5% to 16,302.77. The Standard & Poor’s 500 index rose 25 point to 1866.52. On Friday the S&P reached a new intraday high of 1883.97 before fading. The Nasdaq Composite index added 31 points, or 0.7%, to 4276.79.

In a policy statement Wednesday, the FOMC hiked guidance for the federal funds rate to 1% at the end of 2015 and 2.25% at 2016’s end, compared to the previous 0.75% to 1.75%, respectively; it’s currently 0-0.25%. The Fed repeated that the funds rate will remain near zero for a “considerable time” after its bond-buying program ends. However, at the press conference afterwards, Yellen was asked to clarify the timing and said it “probably means something on the order of around six months.”

She shocked the market by putting a number on it—six months, notes Frederic Dickson, chief investment strategist at D.A. Davidson. Investors are still mulling whether that was just a rookie mistake or perhaps an inadvertent disclosure of FOMC thinking. Investors know rates are going up, and probably in 2015, yet the subject will likely remain a trip wire for market volatility in coming months (Barrons Online).

It’s beginning to seem that, short of war, this
market’s going up, so perhaps it’s no wonder that talk is building of a
2000-style stock market bubble.

Shares jumped 1%
last week, notching another all-time record high despite a serious
confrontation between the U.S. and Russia over its moves in the eastern
Ukraine. Geopolitical concerns were trumped by improving U.S. economic data,
and conciliatory-sounding comments from Russian President Vladimir Putin
assuaged the market. Nevertheless, the situation on the ground in Crimea
remains unpredictable and tense, and could yet come back to slam the market.

On the week, the
Dow Jones Industrial Average picked up 131 points, or 0.8%, to 16,452.72. The
Standard & Poor’s 500 index gained nearly 19 points to 1878.04, a new high.
The Nasdaq Composite index rose 28 points, or 0.65%, to 4336.22. The Russell
2000 small cap index soared 1.7%, or 20 points, to 1203.32, and a nearly 3%
one-day jump Tuesday helped fuel the bubble talk.

The more
important geopolitical issue could extend beyond the dust-up over the Ukraine,
leading to future market-slamming confrontations between the West and Russia
over other issues, like Syria and Iran, says James Russell, senior equity
strategist at U.S. Bank Wealth Management. “Cooperation with Russia could
be off the table, and that could lead to more strident event risk later this
year,” he adds.

U.S. domestic
data continue to show trends that are “two steps forward, one step
back,” Russell adds, but remain supportive nonetheless of the rally. Last
week’s report of a drop in jobless claims and a larger-than-expected rise in
payrolls was welcomed by investors.

In addition to
the equity rally, a hot IPO market is also behind the bubble talk. Initial
public offerings are ramping up so the market will have to digest a lot of new
stock supply, he adds. Bad-weather issues might also be reflected in the
first-quarter reporting season (Barrons Online).

The big question for investors on the sidelines over
the past two years has been: Am I late to the party?

Fret not. This party never seems to end.

The S&P 500 hit another new closing high on
Friday, and the Dow finished just 1.5% off its all-time peak. Importantly, the
S&P closed on Thursday above 1850, a technical level that investors have
been talking about for weeks.

Asked why everyone’s so bullish, several strategists
pointed to strong consumer confidence data and evidence of sales growth for
durable goods—major manufactured products like electronics and defense
equipment. Federal Reserve Chair Janet Yellen also helped lift markets in
testimony before Congress when she remarked that economic data had been
surprisingly weak for the past six weeks, opening the door to a pause in the
taper.

Results from retailers also indicated that Americans
are feeling confident. Macy’s(ticker:
M) reported better than expected earnings results and held the line on holiday
season discounts, even as its peers gave away the store.

But data and Fed-speak just added extra oomph to the
Street’s already-bullish sentiment. “I don’t think there was a
particularly strong positive catalyst,” said Paul LaFleche, who oversees a
$13 billion portfolio for insurer FM Global. “Maybe it’s the absence of
negatives. People continue to have a lot of cash and want to come back to
stocks.” La-Fleche says FM Global’s portfolio tends to hold 45% to 50% in
equities, but the firm has increased its equity weighting to more than 50%.

Sunday March 9 will mark the five-year anniversary
of the S&P 500’s closing low of 676.53. Including dividends, stock returns
have more than tripled since then. LaFleche says the growth has mostly been
driven by multiple expansion—investors willing to pay more for the same
earnings. He agrees with most strategists that stocks will rise by high single
digits this year, driven almost entirely by earnings growth.

For the week, the Dow Jones Industrial Average rose
1.4%, or 218 points, to 16,321.71. The Standard & Poor’s 500 index rose 23
points, to 1859.45. The Nasdaq Composite index climbed 1%, or 45 points, to
4308.12.

The Dow rose 4% in February, and the S&P 500 was
up 4.3%, its best February reading since 1998. Several stocks have considerably
outpaced the benchmark. In fact, 77 stocks have risen at least 10%, while only
30 have fallen that much. “Maybe it’s a stockpicker’s market,”
commented Howard Silverblatt, an analyst at the S&P Dow Jones Indices. (Source:  Barrons Online).