Stocks had a strong week, bolting higher in a stout rebound after the sell-off instigated by Japan’s earthquake/tsunami/nuclear crisis nightmare. A nightmare that’s still ongoing, by the way.
Oil didn’t move much today, but energy stocks led the way, along with the material and industrial sectors. IBM, CAT, Chevron and Exxon Mobil account for almost 80% of the DJIA’s advance. DJIA rises 50 to 12220, Nasdaq Comp adds about 6 to 2743 and S&P 500 grinds out 4 to 1313.80.
What’s most impressive about the week’s gains is that they came amid a cascade of unpleasant headlines. Leaking radiation; European debt problems flaring up again; horrendous housing data; weak durable goods orders; another commitment by US military forces as civil war rages in Libya; spreading unrest in Middle East and North Africa; and oil prices marching higher. And of course, that air-traffic controller sound asleep in the DC tower. Horrifying.
It’s all enough to make you not want to leave your house, let alone buy stocks. But buy stocks they did. DJIA rose more than 3% this week, Nasdaq climbed 3.8% and S&P 500 advanced 2.7%. All three snapped two-week losing streaks. At this rate, if the troubling headlines keep up, we could be back at all-time highs before Earth Day.
At this stage, with the liquidity floodgates propped wide open, stocks and other risky assets continue to draw in hot money. It has to go somewhere, and dodgy headlines remain mostly a fleeting concern. There’s little doubt that at least some of the hazards swirling out there will deepen and manifest enough to bring on a reckoning. But for now, every bull thinks they’ll be able to parachute out before all the others stampede for the door.
Active calendar of Fed speakers and economic data next week including pending home sales, Case-Shiller reading on home prices, personal income & spending, various gauges on manufacturing and finally the March jobs report capping off Friday.