U.S. stocks had their best gains in the past three weeks last week as the major indexes moved to within percentage points of their all-time highs.
NASDAQ gained 2.2% for the week, closing within 1.1% of its March 2000 all-time high. The Dow and the S&P 500 both added 1.7% for the week; the Dow is now within 1.3% of its all-time high, while the S&P is now less than 1% shy of its record set last month. Stocks were up four out of five days last week, falling only on Tuesday. The S&P’s 10 sectors were led by a 3.3% jump in industrial stocks. On Friday shares of General Electric, which is also a Dow component, soared 11% after it announced it was largely getting out of the financial services business. The stock closed the week at $28.51, its highest close since the global financial crisis in 2008. Energy stocks rose 3.1% as crude oil prices gained more than 5%.
European and Asian markets continued to outperform the U.S., driven by easier monetary policies. In Europe, the Stoxx Europe 600 jumped 3.8%, its best weekly gain this year, closing the week at an all-time high and up more than 20% year-to-date. Germany’s DAX index rose 3.4% for the week and is up more than 26% so far this year. The bond and equity markets are being driven higher by the European Central Bank’s new quantitative-easing program, in which it has pledged to buy €60 billion a month of sovereign bonds in order to lower interest rates and the value of the euro. On Wednesday Switzerland – which is not a member of the currency union – became the first country ever to issue 10-year debt at a yield below zero. The country sold a 10-year tranche of bonds to yield -0.055%, down from 0.011% at its most recent similar bond sale two months ago. The euro was down sharply against the dollar during the week, falling 2.7% to $1.06, its lowest level in three weeks.
Asian markets continued to soar, this time led by Hong Kong. The city’s financial markets were open only three days last week but the Hang Seng index rose nearly 8%, its best week since October 2011. The index extended its winning streak to seven straight sessions, during which it has gained more than 11%. On the mainland, the Shanghai composite rose another 4.4% to raise its 2015 return to nearly 25% in local currency. Over the past 22 sessions over the past month, the index has risen 19 times. Japan’s Nikkei 225 rose another 2.4%, raising its YTD gain to nearly 15%. Indian stocks rose 2.2% for the week.
U.S. Treasury bond prices were higher on Friday but sharply lower for the week. The yield on the benchmark 10-year note closed the week at 1.95%, up 11 basis points for the week, while the 30-year bond closed at 2.58%, up nine bps. On Wednesday the Federal Reserve released the minutes of its March 17-18 monetary policy meeting, at which it removed the word “patient” from its statement as to when it might start raising interest rates off zero. The minutes showed a sharp division of opinion on the Fed about whether to raise interest rates in June, with “several” participants saying it would be appropriate while others said it should wait until later in the year. A “couple” of participants suggested it might wait until 2016. In a separate comment, New York Fed President William C. Dudley said, “There are strong arguments for being a little on the late side,” noting that a too-early increase could force the Fed to have to backtrack later and lower rates back again, damaging its credibility.
Reports/dates/facts/links worth paying attention to over the next week:
- April 13: U.S. Treasury budget report for March.
- April 14: Retail sales for March; producer price index for March.
- April 15: Industrial production for March; National Association of Home Builders housing market index for April; New York Fed Empire State manufacturing survey for April; Fed Beige Book.
- April 16: Weekly unemployment claims; housing starts for March; Philadelphia Fed business outlook survey for April.
- April 17: Consumer price index for March; leading indicators for March; University of Michigan consumer sentiment index for April.
Copyright © 2015 by Wright Investors’ Service, Inc. The views expressed in this blog reflect those of Wright Investors’ Service, Inc. and are subject to change. Statements and opinions therein are based on sources of information believed to be accurate and reliable, but Wright Investors’ Service, Inc. makes no representations or guarantees as to the accuracy or completeness thereof. These views should not be relied upon as investment advice.